Every business faces a lawsuit at some point, which can be challenging to handle without the proper knowledge. A default judgment occurs when a defendant party fails to respond to the court summons. Generally, failure to respond to a lawsuit or ignoring a summons is considered a bad sign, resulting in a default judgment against the defendant. The default judgment can be incredibly challenging for small businesses.
Most small business owners ignore this due to a lack of understanding of the legal laws. However, this can lead to a much worse experience than you think, including unintended consequences. Business laws are more complicated than everyday laws, and only some businesses know how they work. In such situations, it’s best to turn to a lawyer to make sure you are on the right path.
Here, we will discuss some essential tips for business owners to avoid default judgment.
Tips for Small Business Owners to Avoid Default Judgment
Hire A Judgment Attorney
It is probably reasonable to ask why you need a good-judgment lawyer. A judgment attorney can represent and defend you in court, ensuring you follow the legal procedures. Generally, businesses get minimal time to draft responses in their favor. Also, the judgment attorney is well-versed in drafting the response on your business’s behalf, which must be submitted within 20 days. They may also use other methods to resolve the matter, saving you from default judgment.
Collect the Documents
If your small business gets sued, you can collect all the pertinent documents and relevant information related to the transaction and breach of contract to avoid a default judgment. This step is necessary as your attorney may need all these documents to defend you in court. Documentation can play a crucial role in disapproving allegations made against your company. So it is best to keep all the records in handy. It’s not uncommon for businesses to get sued for different reasons. However, with the right approach and following steps like collecting the documents, you can avoid default judgment against your company.
Respond Promptly
If your company is sued or you receive a summon, it is crucial to address this matter with an appropriate response. If you fail to respond within the given timeframe, you can result in default judgment. Carefully read all the documents to understand everything, including the claimed amount, response time, and court handling of the case. Use a formal approach to draft your response.
Prepare the Next Steps
Once you have filed a response to the court, you can prepare other steps to defend yourself and avoid a default judgment. For example, you can create a robust strategy to present yourself firmly in the court. Collect all the evidence that strengthens your case.
Consequences of Ignoring a Lawsuit
Many businesses have the misconception that ignoring lawsuits will not make any big difference. However, this isn’t true. The consequences of ignoring a lawsuit can be worse than losing a case:
Financial Consequences
The consequences of ignoring a lawsuit can be negative, resulting in financial loss. If a defender remains unresponsive to a lawsuit, the plaintiff may receive the total damages they seek, or those damages can be inflated or exaggerated.
Automatic Liability
When you fail to respond to a lawsuit, the court automatically assumes that the plaintiff’s claims are valid and are awarded the total amount they are asking for.
Damaged Reputation
A default judgment can also affect your business reputation, making it difficult for clients to trust you. As a result, you can also face difficulties securing future business partnerships.
Credit Damage
A judgment against your business can damage your credit score, making it difficult to obtain loans and open new business accounts and credit cards.
Conclusion
In the context of a civil lawsuit, it’s common to face default judgment for defenders when they fail to respond or appear in court. Almost every business experiences disappointment when it is sued and doesn’t know how to settle the case. Default judgment can have several negative consequences for businesses. However, by connecting with a reputable lawyer, businesses can effectively tackle every barrier and avoid a default judgment. If you are sued and uncertain what to do next, contact our judgment collection agency. Our expertise will help you navigate complex legal hurdles and avoid default judgments.
