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I have read your comments but I am not quite sure what your specific legal question is that I can help with?
Have you contacted the creditor or their attorney to speak with them directly about a settlement?
Ok, then you will need to file an Answer to the complaint.
This is a link to the Michigan court Answer form: MI Answer Form
You complete it and then file it with the clerk of the court and mail a copy to the plaintiff. You can contact the clerk of the court to get an address and should be able to mail the Answer in to the court..
However, if you respond to the complaint by filing an Answer, the case will then go to a trial and if you don't have any legal defense and the contract makes you responsible for legal costs and attorney fees, then the amount you owe will go up substantially.
So if you don't have a legal defense to their claim (i.e. you paid it, it isn't you, the statute of limitations is up, etc.) then it will actually save you money if you let them get a default judgment as they won't have a day's worth of attorney fees at $250-350 an hour to add on to the eventual judgment.
For 7 years yes. But if they are demanding full payment then they aren't going to dismiss the case unless you have paid them in full. They know if they get a judgment, they can garnish your wages and levy on bank accounts to collect.
So if you fight it and lose the costs are going to go up along with any eventual judgment..
You could contact them and tell them that if you can't settle this with a payment plan, you will have to file bankruptcy to discharge this and some other debts. They will know that they get nothing if you actually filed BK, so that will give you some leverage in negotiating a settlement.
So the best sequence of events would be you either let them get a default judgment and then settle with them after threatening to file BK, or you file the Answer and then settle before any actual trial.
If it was paid before they got a judgment then yes, the underlying cause of the lawsuit would no longer exist. But if they got a judgment, that stays on your credit report for 7 years.