Default During the Time of Corona Virus

It is not yet clear whether the courts are now accepting new cases for filing in debt collection or not, but some people are contacting me with cases they have recently received. Are some law firms have cases previously filed served? Are service processors just finding people home now? Or are people just finding cases that have been dropped off in some way? I don’t know.

But here’s what I do know: if you get served and do not answer a lawsuit in time, you will be “subject to default.” It could happen without further notice. And this presents a huge risk for people in debt.

Let’s talk about what “default” is, first, then I’ll show you why it’s such a risk now.

What Default Is

In litigation, a default judgment occurs when you don’t respond to a suit within a certain amount of time. The judgment will normally be for whatever was sought in the lawsuit. If this happens to you, you have “lost” your suit.

How Default Happens

Default is a two-step process, though often, but not always, these two steps are collapsed into one. The first step is the “Order of Default.” In that, the court finds that service of process occurred and was proper to establish jurisdiction, and you failed to respond. It declares you liable.

The second step is the “Judgment of Default,” in which the court establishes the amount you owe and enters a judgment against you. At that point the debt collector can begin to garnish wages or attach bank accounts (take them). They don’t start collecting, in other words, till there’s a judgment.

The way defaults normally happen in most courts is you are served and due to respond or show up in court on a specific date. THAT is your NOTICE. And no other notice is required unless you do, in fact, respond in court. The court doesn’t require plaintiffs to keep you informed after you ignore service of suit.

Increased Risk During Corona Virus

Suppose you receive summons now of a lawsuit. You may, or may not, even be able to file an answer. But probably are able to, even though you won’t be required to go to court (as of now). If you do NOT file an answer, you may not be entitled to any further notice of the suit at all. That would mean, or could mean, that when the courts reopen, you are immediately liable to have an order of default against you. It MAY even mean that there already IS one, because the courts are in business even if they are closed to the public, and they could be issuing default orders.

When they open again, the debt collector will seek and get a default judgment without ever needing to tell you. Your first notice could be from your employer telling you your check has been garnished. Or from bounced checks coming back to you. During a time like this especially, but always really, this is likely to be a life-threatening disaster.

What to Do

If you have been served a lawsuit, you should respond either with a motion to dismiss or an answer. You cannot ignore the suit just because the court is closed and you don’t have to, and cannot, go to court. In other words, don’t treat this as a vacation. If you’re being sued, take defensive measures immediately. Start defending yourself. As I have pointed out elsewhere, this is actually a good time to do that, because the debt collectors are not in a position to a lot of work on your case. Start defending, and they may drop your case and look for easier pickings.