Should you settle your debt before or after a lawsuit is filed?

MoneyWatch: Managing Your Money Should you settle your debt before or after a lawsuit is filed? We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. .chip { background-image: url('/fly/bundles/cbsnewscore/images/chip-bgd/chip-bgd-moneywatch.jpg'); } By Angelica Leicht Angelica Leicht Senior Editor, Managing Your Money Angelica Leicht is the senior editor for the Managing Your Money section for CBSNews.com, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications. Read Full Bio Angelica Leicht May 7, 2026 / 12:07 PM EDT / CBS News Add CBS News on Google Timing can affect the settlement process, so you should know whether it's better to make an offer before or after a lawsuit is filed. William_Potter/Getty Images Rising credit card balances and stubbornly high interest rates are putting more borrowers in difficult positions right now. And, the economic landscape certainly isn't helping either, considering that prices are rapidly rising as debt totals grow and more borrowers face job losses and other hurdles. In turn, borrowers are falling behind on payments, and when that happens, the repercussions typically start with collection calls and warning letters. But for many, there are also bigger concerns that come with finding yourself on the receiving end of collection calls: the possibility of being sued over the unpaid debt.That concern isn't unfounded, either. Creditors and debt buyers have many tools at their disposal to collect what you owe, and given today's uncertain economy, they are becoming increasingly aggressive about pursuing unpaid balances in court, especially as payment delinquency rates continue to climb. Once legal action enters the picture, though, the financial consequences can escalate quickly, shifting from debt collector phone calls and texts...