Sued by Saucheen Financing LLC? 7 Steps to Take in the First 20 Days

In one 2020 Harris County, Texas case, Saucheen Financing LLC sued a business and a co-defendant (together, “defendants”) and, after winning in court, sought to garnish defendants’ accounts at Chase, Wells Fargo and Navy Federal. Texas has fast deadlines. You have to answer in county or district court by Monday at 10 a.m. after 20 days, and in justice court by 14 days, or the plaintiff can win by default and seize property. If you are being sued in Texas by Saucheen or anyone else, keep in mind these seven steps.

1. Pin down your deadline

After you’re sued (the plaintiff “serves” the lawsuit on you), the clock is ticking. To stop default and its severe consequences, you must file your answer on time in the court in which the suit was filed. Calculate the deadline from the date of service.

If you go to a justice court (claims of $20,000 or less), the answer is due by 14 days. If you go to county or district court (claims exceeding $20,000), the answer is due by 10 a.m. on the Monday after the 20th day. Note these dates.

2. Do not ignore it

Many people stick a lawsuit in a drawer. That is not a good idea. You can lose by default, and the plaintiff can then start collecting, including levying on your accounts, seizing property and more.

Usually, the plaintiff cannot levy or freeze an account until there is a judgment. In some jurisdictions, they can seek a court order called a pre-judgment attachment order if they can show you might move or hide assets. Standards for a pre-judgment attachment are high. A judgment also accrues interest at the statutory rate.

After the judgment, the plaintiff serves your banks with a writ of garnishment. The bank will usually freeze the account(s). The judgment can then be enforced by garnishment or other means, unless the court is persuaded to set aside the default judgment. In county and district court, that’s a step you generally must take within 30 days after the judge signs it.

3. Get the right help

Outside the justice court, a corporation generally must appear through a licensed attorney. Still, Texas courts have held that an answer filed by a non-attorney officer was enough to stop a default judgment. In justice court a non-attorney owner, officer, partner or employee can represent the business. Your attorney might have options like raising errors made during service. A good attorney will review these requirements and potential defenses.

4. Gather your paperwork

Before you contact the lender, look for the promissory note, the financing agreement, the loan agreement and any UCC filings, security agreement, guarantee and related email chains. Read the personal guarantee if there was one, because if there was you may have to pay even if the business does not. Your personal assets, not just the assets of the business, are at risk. If the note was personally guaranteed, the lender may sue the guarantor in the same lawsuit as the business. It may also pursue the guarantor even if the business closes or files bankruptcy. If several owners signed the guarantee, each can usually be pursued for the full amount regardless of ownership share.

5. Look for defenses

The facts are usually the best source of defenses. The statute of limitations may have run (often four to six years for written contracts). There may have been a failure to give required notice of default. The lender may have breached the agreement. The terms may have been unconscionable. Lenders can’t always accelerate the balance of loans in response to a late payment. A legitimate defense can help your leverage in settlement, and it can also lead to dismissal.

In Texas, it has been illegal since 1985 to use a written document signed before the filing of a lawsuit to confess judgment or waive service. And after September 1, 2025, any sales-based financing agreement, including a merchant cash advance, that contains a confession-of-judgment clause will be void and unenforceable. Under the law, a lender cannot require payment by automatic debits unless it holds a first-priority perfected security interest. There is also a $10,000 civil penalty per violation.

Some credit agreements may have clauses requiring you to defend lawsuits in the lender’s home court. But these clauses are not always enforced, and you may be able to challenge venue or jurisdiction. You may also have counterclaims, which are claims you have against the lender. Counterclaims can also provide leverage to negotiate a good settlement.

6. Protect what you can, carefully

Don’t move funds around to dodge a creditor. It can end in disaster. Talk to a lawyer before you move any money. Fraudulent transfer laws let a judge unwind your efforts, and you could wind up owing more. Texas exempts a single adult’s listed personal property up to $50,000 fair market value. Save every letter and email. Write down who you talked to, when and what they said. And don’t admit anything.

7. Weigh settlement and bankruptcy

These lawsuits often settle before trial. A deal can be reached at any point. Filing the answer shows your intent to defend. Settlement can mean a lower balance, a plan to pay over time, a release of claims and dismissal. Keep in mind, a bankruptcy filing creates an automatic stay that stops the case, but bankruptcy is not the right solution for every business.

Before either, you can try a forbearance agreement. It’s a deal with the lender to hold off on enforcement for a set time. Break it and things can get worse. If your business is eligible, you should know about Subchapter V of Chapter 11. It’s a faster, cheaper reorganization. The creditors don’t vote on your plan, and you keep operating the business.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.