(This article is for general informational purposes based on New Jersey law and procedure. Your state may be different. Always seek prompt legal advice.)

If you don’t pay your debts, a lawsuit is the essential first step for most creditors to be able to use the courts to collect what you haven’t paid. Usually the first notice that you are being sued is when you receive a Summons and Complaint. The Summons tells you when, where, and how you have to answer the Complaint, and that if you do not, Judgment by Default can be entered against you. The Complaint lists facts that the party suing you (called the Plaintiff) believes give rise to a right to a judgment. Increasingly, the Summons and Complaint are served by mail. Therefore, if you are expecting a possible suit, it is not a good idea to ignore or refuse certified mail, or refuse to open mail received from a law office.

As soon as you receive ANY notice (even oral or informal notice) that you have been sued, you have to act. See a qualified lawyer for advice right away. If you feel the suit is unjust or that you have defenses to the suit, you must file a timely Answer. In New Jersey, the time to Answer is 30 to 35 days from the date of service. The Answer must be filed with the court before that time is up. Filing occurs not when you mail the Answer out, but when it reaches the court clerk. It is best not to wait until the last minute.

Who can file an Answer for you depends on who is being sued. Adult individuals are allowed to represent themselves in court and file “pro se” Answers. However, corporations, partnerships and Limited Liability Companies cannot file an Answer except through an attorney. An Answer filed by a partner, member, officer, or shareholder may be rejected.

The Answer is formal notice that you are disputing the plaintiff’s right to whatever judgment or relief they are asking for. An Answer must correctly identify the lawsuit, usually by a caption, with the correct docket number. You should see a caption on the Complaint. Your caption needs to have your name, address and telephone number, plus any other information that court rules may require. A copy of the Answer needs to be mailed to each other party to the suit or to their attorney, when it is filed, and there must be filed a Certificate of Service that shows who was served this way, when, and how. There may be a filing fee that must be paid to the court clerk.

What the Answer should contain is are admissions or denials of the facts set out in the Complaint, and anything else that explains why you are disputing the suit. The legal and technical requirements of an Answer are beyond the scope of this article. You should see an attorney for specific legal advice about what should be in the Answer. However, many courts will treat any filed document that disputes the lawsuit as a form of Answer. But without legal advice, such informal documents may not preserve all your rights. Whatever you file, make sure you keep a copy and have proof that the clerk and the attorney for the plaintiff received your Answer in time. You may need to hand-carry your Answer to the clerk’s office with an extra copy for them to stamp filed and return to you.

If you do not file an Answer, you may lose important rights. There may be good reasons why you do not need to file an Answer, but you should always see an attorney about that.

Most lawsuits are seeking a money judgment. Sometimes, the suit is for mortgage foreclosure. In New Jersey these can be identified by a docket number starting with “F”. Sometimes a suit is to foreclose on a tax sale certificate (a certificate sold to a person who has paid real estate taxes on a piece of real estate); in that case, the end result may be that you may lose your title to the real estate. Or a suit may be asking the court to give the suing Plaintiff some other kind of remedy or relief. To be sure, you should see a lawyer without delay.

What happens if a judgment is entered against me?

A judgment against you will be entered if (a) you do not file an Answer, and the Plaintiff has filed an application for Judgment by Default; (b) you filed an Answer but after a trial or on a motion by the Plaintiff, the court decides that you lose. Assuming the judgment is for money, the Plaintiff then has the right to begin collection against you.

I got sued. When can they start seizing my money or property?

Generally, unless and until a judgment is entered against you, someone you owe money to cannot seize your property, attach your wages, or take other collection actions. (There are important exceptions. These include car or motor vehicle lenders with a right of repossession, many taxing authorities, and some but not all other secured creditors.) Again, you need to see a lawyer to know what your situation is.

A creditor with a judgment can, without any notice to you, get a “Writ of Execution” from the court, and have a Sheriff or court officer seize your bank account, or levy on your other property. The issuance of the Writ of Execution can have important consequences, so at this stage you need to get prompt legal advice about your options. If you wait too long, you might lose important rights, including the right to use a bankruptcy permanently to stop the Plaintiff from collecting from you. Act Promptly.

They served a levy on my property. What does that mean? A levy generally means everything described or included in the levy is under the control of the sheriff or court officer, and is subject to public sale. You cannot, without potentially serious consequences, ignore the levy or remove, sell, hide or dispose of the property. However, individuals have certain types and amounts of property that they can exempt. You need to see a lawyer right away. You may need a bankruptcy to stop the levy or the loss of your property.

I never got the Complaint. What do I do? You might have the ability to set aside the judgment, but you have to act quickly. Generally you will have to show excusable neglect and a meritorious defense. This means there must have been a good reason why you did not file your Answer earlier, and you must have a real basis for challenging the suit. See a lawyer right away.

I just got notice that my bank account is frozen! What happened? Most likely there has been a levy on your bank account. You are generally not entitled to advance notice. First, check your bank to find out who served the levy. See a lawyer right away. In New Jersey, the money will stay frozen in your bank account until the levying creditor files a “Motion for Turnover”. Stop making more deposits into the frozen account.

My joint bank account just got frozen but it’s not my debt that they are trying to collect. You need to see a lawyer right away. In New Jersey, money in a joint account generally belongs to the person who put the money into the account, but if you cannot prove how much of the money in the joint account is yours, the courts will presume ownership in equal shares for all account holders. If you have proof of your “net contributions” to the account, you need to present that to the court, the creditor’s attorney, and to the bank. You will probably have to go to court to get your money back.

For this reason we recommend that when one party to a joint account is having financial trouble, the parties establish separate bank accounts and keep their money separate.

What else can they do to try to collect? Judgment holders can make answer written questions under oath, or make you appear somewhere to answer questions under oath about your assets and liabilities. They can levy on your property and have a sheriff or court officer sell it at a public sale. They can apply for and get an order to attach your wages or income.

If you are at this point, you need to see a qualified lawyer to discuss all your options, including bankruptcy.

This discussion is for general educational and information purposes only. It is not necessarily complete. Each situation is different and the general advice above may not be right for you. Always seek prompt legal advice from a qualified attorney.

We are NJ bankruptcy attorneys. We help people obtain debt relief under the Bankruptcy Code.

IRS CIRCULAR 230 DISCLOSURE: Pursuant to Treasury Regulations, any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used or relied upon by you or any other person, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any tax advice addressed herein.