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I am sorry to hear about this situation. To avoid a default judgment - yes - someone in your situation has to file an answer. An answer sets the matter for a trial track months down the line. Doing so not only disallows default judgment, but also allows the Plaintiff and Defendant to negotiate and possibly reach a settlement.
There are many defenses for a breach of contract/debt case. The answer sample I am attaching with this reply provides a list of them. If unsure, many people simply use a "general denial" answer.
A copy of the answer is sent to the court, and a copy to the opposing party.
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