What to do if you’re being sued
Check that the documentation you received has been issued by a court
Sometimes debt collectors will send you documents that look like formal court documents but they’re not actually issued by a court.
The first thing to do is to check that the formal documentation has:
- the name of the relevant court and a court stamp
- a court number
- a section telling you what will happen if you don’t respond within a certain time
If the document has the above information, then a court has issued them.
If you’re unsure whether the court has issued the document, ring the court to check.
Depending on where you live, formal documents could be called a ”Claim”, ”Statement of Claim”, ”Complaint” or a ”Summons”.
There are different rules in different courts about how the documents must be delivered to you. The court document can be:
- handed to you personally
- left at your address
- sent by certified mail
- sent by ordinary post
The document will tell you how long you have to respond. The time to respond varies depending on the State or Territory you live in.
If you’re a tenant and have received a notice to vacate, a notice of hearing or similar, refer to Rent.
You have six options once you’ve received a formal notice that you’re being sued. Get legal advice on the best option for you. They are:
- Contact the creditor to:
- negotiate a repayment arrangement
- dispute the debt claimed
You can negotiate with your creditor even after court action has started. Make sure you get legal advice as it is important that you understand what happens in the court proceedings. If possible, try to negotiate with the creditor for the court proceedings to discontinue or lapse by agreement.
- Lodge in external dispute resolution (if available) if:
- you’re in financial hardship
- you have a reason why you don’t owe the debt claimed.
If your creditor is a member of an external dispute resolution scheme, this may be your best option as the creditor cannot get judgment while the dispute is being considered. This is why you need to lodge in external dispute resolution before judgment is obtained. Lodging a dispute in an external dispute resolution scheme may give you the opportunity to negotiate so that no court judgment is entered against you.
- Confess to the debt by agreeing you owe the money
This involves filling in some forms with the court to confirm that you owe the debt. Do not confess to the debt until you get advice.
- Defend the court action
Court procedures are different in each state and territory, but generally you defend the court action by lodging documents (called a “defence”) with the court that set out the reasons you do not owe all or part of the debt (before the time limit given in the claim document). Please be aware that if you defend the action and lose, much higher costs may be awarded against you (including any legal costs for the other party) than would have been the case if you hadn’t defended the court action.
- Do nothing and don’t attend court
This means that your creditor is likely to get a default judgment against you.
- Apply to the court to pay the debt in instalments
Get advice before you do this. Applying to pay by instalments means you are agreeing you owe the debt and a court judgment can be obtained.
Call to speak to one of our financial counsellors
Before deciding which option is right for you, call us on 1800 007 007 to talk it through.
We may be able to assist you with options 1, 2 and 6; and we can refer you to appropriate legal advice for the other options.