LoanMe INC Business Debt Lawsuit: 5 Things to Do First

You are being sued by LoanMe, Inc. They are a lender who makes loans both to consumers and to businesses. Of course, they sued to recover on the loan. But the reason for the loan going into default is not relevant now. What IS relevant is that the clock is running; you usually have 20 or 30 days to answer the suit once they have taken papers to you (to show you’ve been served). So you shouldn’t ignore the suit. You need to find all the paperwork and get with an attorney to look it over. Then you need to pick your response (answer, settle, bankruptcy) and go with it.

1. Find your deadline

If you are being sued for a debt, and you were served the court papers in California, you may have 30 days (not 1 month) to respond to the lawsuit. If you need more time to respond, both you and the other party can agree to a 15-day extension without having to ask the court (California Rule of Court 3.110(d)). If you’re in federal court, the period is 21 days; other state courts give 20 to 30 days to respond, generally.

2. Do not ignore it

It is important to file an answer with the court whether or not you owe the money, AND whether or not you can afford to pay it back. If you do not respond to the lawsuit, the creditor may ask the court to grant a judgment against you for everything it asked for in the lawsuit. In many states, the judgment also means that the creditor can try to garnish your wages or bank account (taking money to pay the judgment) or take your property to sell in order to pay the judgment. It is almost always easier to deal with the lawsuit early.

In most states a creditor cannot freeze your bank account unless it already has a judgment against you. That said, if the lender can show you’re about to transfer your assets to hide them, the lender may be able to get an order putting a freeze on your bank account. Default judgments can sometimes be set aside, but working to avoid the default works much better.

3. Pull your loan papers

Look at everything you signed; decide whether you were co-signer or guarantor; look at loan amount, payments and payment dates; look at the amount due (and any late fees or interest due). If you personally guaranteed the loan, you need to understand that (as a legal concept) it’s a separate contract, one that generally makes the business debt personal. What that means is that the lender can make a demand on you to satisfy the loan obligation and may go after your personal bank accounts, real estate and investments if you don’t. And the guarantee generally survives even if the business closes or files bankruptcy.

Also start pulling together all versions of the promissory note, loan agreement and personal guarantee. If there are UCC filings, you’ll want those as well. And dig up every single email and letter you have with the lender. Next, check the lender’s license. California requires lenders making commercial loans to be licensed; you can check their license at the DFPI website.

Why do those UCC filings matter? Generally, a UCC-1 form is filed to give the lender a security interest in your (the borrower’s) business equipment, inventory and receivables. This means that the lender will potentially have the right to seize and sell that collateral to pay off the loan. And in a lot of cases, the lender can do that apart from the lawsuit.

4. Get a lawyer involved

A lawyer is your best bet to figure out what to do. In California, an LLC or corporation generally must have a licensed attorney in court; so if that’s you, get a lawyer. If you’re a sole proprietor, you can represent yourself in court. But even if you can, I’d strongly recommend you talk to a lawyer. The filing fee, as of 2026, is $435 to answer for an unlimited civil case (over $35,000 at stake).

There may be defenses to raise. First, California generally gives 4 years to file suit on a written contract (see California Code of Civil Procedure Section 337) so if the suit is filed late, that will provide a defense to the action. But sometimes there is a later date of default or another event; so watch out for that. Note that commercial loans generally fall outside the protection of the federal Fair Debt Collection Practices Act (the FDCPA); it covers consumer loans only. Other possible defenses include the lender didn’t give a default notice (or did it wrong), improper acceleration, and the suit was filed in the wrong court.

5. Pick your response

One option is to fight. Another option is to settle. And a third option may be to file bankruptcy. Choosing to fight? A good option is file an answer, or write and file a motion to dismiss for incorrect service of the Summons and Complaint. Also, you could file a Cross-Complaint; any of these are best done by a lawyer, in my opinion. Settling should be possible at any point; the lender’s willingness to negotiate often depends on how strong its case is, how much you can really pay and its expectation about how much it will cost to bring the case to court. If there are strong legal or factual defenses, that’s something to consider.

Federal bankruptcy filings usually do stop a creditor lawsuit in its tracks, immediately. It’s the automatic stay. A Chapter 11 bankruptcy lets your business keep operating while it restructures. Subchapter V is a flavor of Chapter 11; it is supposed to be faster and cheaper, for eligible small businesses. But bankruptcy isn’t the answer to every problem. And filing a bankruptcy alone may not solve your personal guarantee problem.

Whatever option you pick, don’t move around any assets to protect them from the lender. A court can undo the transfer. Also, don’t call the lender back and confess on the telephone. What you say can be used against you. And finally, no matter what your decision is, do it as soon as you can. What a lawyer can do for you depends on timing; the sooner you get an attorney involved, the more options you’ll have.

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.