What to Do If You're Sued While in Debt Forgiveness

A lawsuit can complicate your relief strategy. if one arrives while you're enrolled. We may receive commissions from some links to products on this page.

Promotions are subject to availability and retailer terms. September 4, 2026 / 10:04 AM EDT / CBS News. If you've ever faced a substantial amount of credit card debt, you know how difficult it can be to get ahead of it, even in a debt-friendly economy.

But today's economic landscape is hardly friendly to those with high-rate debt. After all, the average credit card interest rate is now sitting above 22%, and credit card balances are also rising rapidly as more borrowers find themselves struggling to cover the rising costs of groceries, gas and housing. In turn, carrying credit card debt from month to month is a particularly expensive proposition right now — especially if you're facing an unexpected financial hardship.

If you're struggling with credit card debt in this landscape, the idea of enrolling in a debt forgiveness program can seem like an appealing option. After all, these programs, also known as debt settlement programs, can help you resolve your high-rate balances for a smaller amount. Borrowers who enroll in these programs typically settle their balances for 30% and 50% less than they owe on average, making it easier to pay off what's owed.

But reaching those settlements isn't instantaneous, and a lot can happen while the process is underway. In fact, one of the more serious complications can occur if a creditor decides to take legal action before a settlement is reached. So, what exactly happens if you're sued by a creditor while you're enrolled in a debt forgiveness program?

That's what we'll examine below. Find out how you can start getting rid of your unpaid debt now. Being enrolled in a debt forgiveness program generally won't stop a creditor or debt collector from suing you over an unpaid balance.

That's because debt forgiveness is a negotiation process, not a form of legal protection from debt collection. Until a settlement agreement is reached and the agreed-upon amount is paid, the creditor can typically continue trying to collect the debt through any legal means, including through a lawsuit. The way debt forgiveness works can also create a window in which that legal action is possible.

During this process, borrowers typically set aside money each month that will eventually be used to fund settlement offers. It can take several months or longer to accumulate enough to begin resolving their enrolled accounts. In the meantime, creditors aren't required to participate in the program or wait for a settlement offer.

Interest and fees may also continue to accrue on the unpaid balances. So, if a creditor files a lawsuit against you during that period, your enrollment doesn't put the case on hold. You'll still need to respond according to the rules and deadlines outlined in the court documents, even if your debt relief company is already negotiating with that creditor.

And while some debt forgiveness companies may offer support or guidance when borrowers are sued over an enrolled account, you shouldn't assume the debt relief company will respond to the lawsuit or represent you in court. Ignoring the case can also have serious consequences. If you don't respond by the required deadline, the creditor may be able to obtain a default judgment against you.

What happens after that depends partly on state law, but a judgment can potentially give the creditor additional ways to collect, such as garnishing eligible wages, levying funds from a bank account or placing a lien on certain property. A lawsuit doesn't necessarily bring the debt forgiveness process to an end, though. Settlement negotiations may still continue while the case is pending, and in some situations, reaching an agreement could resolve the debt before the creditor obtains a judgment.

But once a lawsuit has been filed, the timeline and negotiating dynamics may change. Learn what debt relief options you could qualify for today. Facing a lawsuit while you're already trying to resolve your debt can add another layer of financial pressure to the mix, but taking action quickly can help you understand and capitalize on your options.

Start by notifying your debt relief company of the issue. Provide the company with copies of the summons, complaint and any other court documents you've received. During that process, ask whether the creditor is already being negotiated with, how much you've accumulated toward a potential settlement and whether the lawsuit changes the strategy for that particular debt.