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If you were sued, and it settled, then I would confirm with the Plaintiff that it intends to dismiss the lawsuit. However, if the lawsuit is not dismissed by the time the deadline to file an Answer approaches, then I would likely file a basic Answer which denies everything, and informs the court that a settlement has been reached. At the least, the Answer will prevent the court from entering a default judgment against you. After all, if the plaintiff is not diligent in dismissing the case, and a judgment is entered against you, then you have the headache of trying to get the judgment vacated. But before filing an Answer, I would confirm with the plaintiff that it will dismiss the lawsuit, and ask for the date when the dismissal will be filed.
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