If you have been served with a debt collection lawsuit and you do nothing, the creditor wins automatically. Not because they proved their case — but because you failed to respond. California allows creditors to file a default judgment against defendants who fail to respond by the deadline after service, and that judgment gives the creditor powerful tools to collect money directly from your paycheck and bank account.
Ignoring a lawsuit is one of the most costly mistakes a consumer can make. This article explains why you should not ignore the lawsuit, and what your options are.
Is This Article for You?
This article applies to private debt collection lawsuits — cases filed by credit card companies, debt buyers, medical providers, landlords, and similar creditors in California civil court. If your situation involves a government agency like the IRS or a child support order, different rules apply.
Step One: The Clock Starts When You Are Served
When a process server hands you a summons and complaint — or completes substituted service at your home — the clock starts. In California, you have 30 days from the date of service to file a written response with the court.
That 30-day window is your opportunity to act. You have more options than most people realize.
Your Options After Being Served
1. File an Answer
An Answer is a written response to the complaint filed with the court. You admit or deny each allegation and raise any affirmative defenses you have — the statute of limitations, payment already made, the debt is not yours, the amount is wrong, improper service, or others. Filing an Answer forces the creditor to actually prove their case rather than simply collecting on a default.
If you want to respond to the lawsuit yourself without hiring an attorney, see our step-by-step course: How to Respond to a Debt Collection Lawsuit in California
2. File a Demurrer
A demurrer challenges the legal sufficiency of the complaint itself — arguing that even if everything the creditor says is true, they have not stated a valid legal claim. Demurrers are procedural tools that can buy time or knock out weak claims. They are more technical than an Answer and typically benefit from legal guidance.
3. File a Motion to Compel Arbitration
If the original contract — a credit card agreement, loan agreement, or service contract — contains an arbitration clause, you may have the right to demand that the dispute be resolved through arbitration rather than in court. A motion to compel arbitration asks the court to stay the lawsuit and send the case to an arbitrator. Arbitration proceedings are private, often less formal than court, and can result in different outcomes than litigation. Many consumer contracts contain mandatory arbitration clauses — check the original agreement carefully.
4. Negotiate a Settlement
You do not have to litigate to resolve the case. Most debt collection cases will settle — sometimes for significantly less than the amount claimed. You can negotiate directly with the creditor’s attorney or through your own attorney. Any settlement should be in writing and should specify that the case will be dismissed with prejudice upon payment.
5. File for Bankruptcy
If the debt is part of a larger financial problem, bankruptcy may be the most effective solution. A Chapter 7 bankruptcy filing triggers an automatic stay that immediately stops all collection activity, including the lawsuit itself. Most unsecured debt — credit cards, medical bills, personal loans — can be discharged in Chapter 7. A bankruptcy attorney can assess whether this is the right path for your situation.
What Happens If You Do Nothing
If you do not respond within 30 days, the creditor can ask the court to enter your default. Once default is entered, you lose the ability to participate in the case. The creditor then applies for a default judgment — typically on paper, without a hearing — and the court signs it.
Once signed, it is a court order with the full force of law.
Collection Begins
Wage garnishment — Up to 25% of disposable earnings or the amount above 40 times minimum wage, whichever is less.
Bank levy — Your bank account can be frozen and funds seized up to the judgment amount. This can happen without warning.
Property liens — The judgment can be recorded as a lien against real property you own.
The creditor does not need your cooperation or further court approval to use these tools.
How Long Does a Default Judgment Last?
In California, a civil judgment is enforceable for 10 years and can be renewed for another 10. Interest accrues at 10% per year. A $5,000 judgment left unpaid for 10 years grows substantially.
Frequently Asked Questions
What if I never received the lawsuit papers?
If you were never properly served, the default judgment may be challengeable under CCP 473.5. Pull the proof of service from the court file and compare it to your actual circumstances.
What if I thought someone else was handling it?
California courts have granted relief under CCP 473(b) for this type of excusable neglect. You must act within 6 months and file a declaration explaining what happened.
Can I still negotiate after a default judgment?
Yes. Creditors often prefer a discounted lump sum to years of collection. You have more leverage than you might think, especially if your income and assets are limited.
How do I find out if a default judgment has already been entered against me?
Search the court’s online case portal using your name, or go to the clerk’s office in person and request a search.
The Bottom Line
A debt collection lawsuit is not the end of the road — but ignoring it is. Every day you wait after being served is a day closer to losing rights you cannot easily get back. A default judgment hands the creditor tools they would otherwise have to fight for: the power to garnish your paycheck, freeze your bank account, and put a lien on your home — all without ever proving in court that you actually owe the debt.
You were served because a creditor is betting you will do nothing. Responding — in any of the ways described above — changes the entire dynamic of the case. It forces the creditor to prove their claim, opens the door to negotiation, and buys you time to evaluate every option available to you.
If you are ready to fight back on your own, start with our step-by-step course on how to respond to a debt collection lawsuit in California: How to Respond to a Debt Collection Lawsuit in California
If your situation is more complex — multiple debts, a judgment already entered, or income you need to protect — talking to an attorney is worth it. You may have more leverage than you think.
This article is for general informational purposes only and does not constitute legal advice. Laws and procedures change. Consult a licensed California attorney for advice specific to your situation.