Arizona residents who are sued by creditors or collection agencies over an outstanding debt may wish to fight the matter in court. Once a judgement is awarded, the only way it can be changed is by a court order, and it may be difficult to dispute the amount in question. A judgement also gives creditors additional tools to collect an outstanding debt. The amount of the judgement could also be higher than the debt in question due to the addition of collection costs and legal fees.
Some people believe that refusing to accept a certified letter notifying them of a lawsuit will delay the legal action, but this is not the case. If a lawsuit is ignored, the plaintiff will likely be awarded a judgement. However, if the lawsuit is answered, the creditor or collection agency will have to show evidence to the court that the debt is legitimate.
Once a judgement is granted, a creditor or collection agency will often to take additional steps to collect the money owed. These steps could include garnishing the debtor's wages or placing a lien against their property. Creditors may also be able to freeze some or all of the funds in the debtor's bank account.
While not all creditors or collection agencies take legal action to recover monies owed, a great many of them resort to tactics bordering on harassment in order to encourage payment. Filing a bankruptcy will put an immediate end to phone calls, letters and legal action from creditors, and these obligations may be discharged as part of a bankruptcy in certain situations. An experienced bankruptcy attorney can explain the differences between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy and can offer advice regarding which of these options is most appropriate based on a client's particular circumstances.
Source: Consumer Financial Protection Bureau, "What should I do if a creditor or debt collector sues me?", November 09, 2014