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It is possible to defend yourself from a civil suit while incarcerated, however, your friend is going to have to be much more diligent about attending to the matter if he plans on successfully defending the action.
I am going to assume that your friend had what is called a "default judgment" entered against him.
This is a judgment based on the fact that he did not appear in the action (did not file an answer or other responsive pleading).
The proper procedural mechanism for your friend to attack the judgment at this point is to make a "Motion to Vacate Default" under Indiana Rule of Civil Procedure 60 B.
While Indiana does not have a form for this motion, it is usually possible to search for a couple of samples (sometimes pleading papers are posted online), or you can visit your local (county) law library to see if you can find a template there.
Your friend may have access to resources where he is incarcerated.
Maximum amount of time is 1 year, but if you read rule 60B (you can find the text of the rule here: http://www.in.gov/judiciary/rules/trial_proc/#_Toc452452015), the motion must be filed "within a reasonable time" - so your friend will want to file this motion as promptly as possible.