You’ve Been Sued & You’re Already in Default: The Immediate Consequences for Your Business

Getting sued is stressful. Getting sued and then being told you are “already in default” is worse, especially when you are not even sure what you missed.

Many business owners assume default is a technical mistake, something a court clerk can fix, or a deadline that can simply be extended. In reality, default is far more serious. It is not just procedural. It is the plaintiff gaining a strategic advantage before the case even begins.

If you own a business in Florida, understanding what default really means, how it happens, and what can still be done afterward can make the difference between a defensible case and a judgment entered against you with little resistance.

What Does It Mean to Be “In Default” in a Lawsuit?

In Florida civil litigation, a default occurs when a defendant fails to respond to a lawsuit within the time allowed by law. Most commonly, this means failing to file a response within 20 days after being properly served with the complaint.

Once default is entered, the court treats the factual allegations in the complaint as admitted. That does not mean the plaintiff automatically wins everything, but it does mean the playing field shifts sharply in their favor.

At that point, the case is no longer about whether you are liable, but it is often only about how much you owe.

How Businesses End Up in Default Without Realizing It

Most defaults do not happen because a business is ignoring a lawsuit on purpose. They happen because of breakdowns in communication or misunderstandings about service.

Common scenarios include:

• The lawsuit is served on a registered agent who forwards it late
• The papers are delivered to a former office location
• An employee receives the documents and does not escalate them
• The owner believes insurance or a partner is “handling it”
• The business assumes informal negotiations pause the deadline

Florida courts do not excuse default simply because the lawsuit was overlooked or misunderstood. Once service is deemed proper, the clock starts running whether you read the complaint or not.

Why Default Is Not Just a Procedural Issue

This is where many defendants underestimate the risk.

Default is not merely a missed filing. It is a legal concession. When default is entered, the plaintiff no longer has to prove the core facts alleged in the complaint. The defendant loses the ability to deny liability, challenge key allegations, or raise many affirmative defenses.

From the plaintiff’s perspective, default is leverage. It increases settlement pressure, limits the defendant’s options, and often shortens the path to judgment. From the defendant’s perspective, it is a weakened negotiating position from day one.

What Rights Does a Plaintiff Gain After Default?

Once default is entered, the plaintiff may be entitled to proceed toward a default judgment. Depending on the case, this may include:

• Proving damages without opposition
• Obtaining court hearings without a full trial
• Seeking attorney’s fees and costs if allowed by contract or statute
• Using the judgment to pursue collection remedies

In business litigation, this can quickly escalate into bank levies, liens, or post-judgment discovery aimed at identifying assets.

Can a Default Be Set Aside in Florida?

Sometimes, yes. But it is not automatic. Florida courts may set aside a default if the defendant can show:

• Excusable neglect
• A meritorious defense
• Prompt action once the default is discovered

All three must typically be present. Courts look closely at whether the failure to respond was reasonable and whether the defendant acted quickly to correct it.

Waiting too long, or treating default as a minor issue, often makes relief far more difficult.

Why Speed Matters Once You Learn You Are in Default

Time is critical. The longer a default sits, the more entrenched the plaintiff’s position becomes.

In our experience, businesses that move quickly often preserve options that disappear even a few weeks later. That includes reopening the case, limiting damages, or negotiating from something closer to parity.

Businesses that delay often find themselves reacting instead of defending.

Default Judgments and Business Consequences

A default judgment is not just a court order on paper. For a business, it can affect:

• Credit relationships
• Banking access
• Licensing and compliance issues
• Future transactions and financing
• Personal exposure in certain circumstances

Once judgment is entered, reversing it becomes significantly harder than addressing a default early.

What Business Owners Should Do Immediately

If you learn that your business has been sued and may already be in default, the most important step is not panic. It is clarity.

You need to know:

• Whether service was legally proper
• Whether default has actually been entered
• What deadlines still exist
• What defenses may still be available

At that stage, strategy matters more than explanations. Courts focus on legal standards, not good intentions.

Why Early Legal Counsel Makes a Difference

Default cases are not about filling out forms. They are about restoring leverage.

An experienced business litigation attorney can assess whether default can be vacated, how to contain the damage if it cannot, and how to position the case moving forward. In some situations, the goal is reopening the case. In others, it is minimizing exposure before judgment becomes final. Either way, delay favors the plaintiff.

Final Thought for Business Owners

Being sued is disruptive. Being in default is dangerous. The difference between the two is not paperwork. It is power.

If your business is facing a lawsuit in Florida and you believe a deadline may have been missed, contact one of our experienced attorneys in Miami at 305-570-2208.

You can also contact our team directly at: arianna@ayalalawpa.com

Schedule a case evaluation online here.

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].