Can You Get Sued For Credit Card Debt?
Getting sued over credit card debt can be a scary, stressful situation. Let’s walk through what happens when you get taken to court for owing money on a credit card – and what you can do to respond.
How Does the Credit Card Debt Lawsuit Process Work?
If you fall far enough behind on your credit card payments, the credit card company may eventually decide to take legal action and sue you for the money you owe. Here is a quick rundown of the basic process:
-- You miss payments on your credit card debt
- The credit card company sends letters and makes calls demanding payment
- After 6 months to a year of nonpayment, the credit card company may sue you for the debt
- You are served with a court summons and complaint
- You have a limited time to respond to the lawsuit, usually around 30 days
- If you don’t respond, the credit card company will likely win a default judgment against you
- If you do respond, you will have to negotiate, settle, or go to court
As you can see, the legal process moves quickly once a lawsuit is filed – you don’t have much time to figure out your response. But don’t panic; let’s break down what happens at each step.
You Get Served With a Summons and Complaint
The first thing you’ll receive if a credit card company sues you is an official court summons along with a complaint. Here are key things to know about these documents:
- The summons tells you that you are being sued, the name of the court handling the case, and the deadline for your response.
- The complaint explains why you are being sued – it will list the credit card debt details, such as the account number, creditor name, amount owed, interest, and fees.
- You will be served these documents either in person or by certified mail.
- These documents mean you are involved in an official court case now.
You Must Respond Within the Deadline
Once served with a summons and complaint, you only have a limited time to respond – usually around 30 days. This deadline will be listed on the court papers. If you do not respond to a credit card debt lawsuit by the deadline, the credit card company will likely win the case automatically by default. This gives them the legal right to garnish your wages, put liens on your property, and take other steps to collect what you owe.
So your first priority is to make sure you respond to the lawsuit before the deadline. Even if you don’t yet know how you want to respond, you can file a simple response with the court indicating you contest the lawsuit while you figure out your options. Having any response on file will stop a default judgment from being entered against you if you miss the deadline.
-Verify the Debt Is Yours
Now it’s time to look closely at the complaint and make sure the credit card debt is really yours. Debt collection lawsuits sometimes include debts that have been sold and resold so many times that records get confused. The original credit card company may no longer even own the debt.
This is why it’s important to verify that:
- The account number listed is yours
- The original credit card company named is one you had an account with
- The amount owed matches your records
If anything seems off, dispute the details with the court and ask the plaintiff (the company suing you) to validate the debt is really yours. Force them to prove it.
Consider Whether You Have Any Defenses
Once you’ve confirmed the credit card debt belongs to you, the next step is to consider whether you have any legitimate defenses you can raise. Here are some of the most common defenses in credit card debt lawsuits:
- Statute of limitations – Most states limit how long a creditor can sue you to collect a debt, usually between 3-6 years. If the debt is too old, the creditor may be out of luck.
- Identity theft – If someone opened the account in your name illegally, you are not responsible for that debt.
- Settlement in full – If you already settled the debt, show proof that it was satisfied.
- Mistaken identity – Believe it or not, debt collectors sometimes sue the wrong person entirely.
- Improper service – If you were not properly served the court papers, the case may get thrown out.
An attorney can help you understand if you have any viable defenses to fight the lawsuit.
-Negotiate a Settlement
If you owe the debt and don’t have a clear defense, often the best option is trying to negotiate a settlement. Many credit card companies will agree to settle for less than the full amount owed if you offer a lump-sum payment. This can save you money and avoid going to court.
You can try calling the company’s customer service number yourself to ask for a settlement deal. Be prepared to explain your financial situation and ability to pay. Many credit card companies will accept a settlement of 50% or less of the total owed. Or you can hire a debt settlement attorney to negotiate in your behalf.
File an Answer Disputing the Lawsuit
If you are contesting the lawsuit and want to fight it, you will need to file a formal answer with the court. This is your chance to explain in writing why you believe you do not owe the debt, or owe less than the amount claimed. You can also outline any defenses in your answer.
-Drafting a legal answer requires expertise and precision. Consider hiring an attorney to ensure your answer hits all the right points to give you the strongest case. If cost is an issue, check if legal aid is available in your area.
Take the Case to Court
If you and the credit card company can’t reach an agreement through settlement negotiations or dismissal of the case, that means the lawsuit will move forward to an actual court trial. Both sides will have to present evidence and make arguments before a judge (or sometimes a jury) who will decide the outcome.
Going to court over credit card debt definitely requires working with an attorney. Even if you have a strong defense, you want an experienced lawyer on your side to make the best case. If you win, the credit card company may have to pay your attorney fees.
Be Prepared for Collection Efforts to Continue
Winning a credit card debt lawsuit does not always make the debt totally go away. The credit card company still has the right to pursue other collection methods allowed by law, such as:
- Selling the debt to a collection agency
- Reporting the unpaid debt on your credit report
- Garnishing bank accounts or wages (if allowed in your state)
So expect that the creditor may still take actions to get their money, even if they lost in court. Be ready to continue disputing the debt as needed.
Explore Bankruptcy to Eliminate the Debt
If you simply have no way to pay off your credit card debt, bankruptcy may be an option. Filing for Chapter 7 or Chapter 13 bankruptcy stops collections and can legally discharge credit card balances you owe.
Bankruptcy has serious long-term financial consequences, like damaging your credit score. Meet with a bankruptcy attorney to understand if it’s the right choice for your situation.
Tips to Handle Getting Sued for Credit Card Debt
Here are a few final tips if you find yourself facing a credit card debt lawsuit:
- Act quickly to meet response deadlines
- Speak with an attorney about your options
- Negotiate for a reduced settlement if possible
- Don’t ignore the lawsuit – that will make things much worse!
- Take a deep breath and tackle one step at a time
Dealing with a credit card debt lawsuit can be intimidating; but with the right help and an action plan, you can get through it and hopefully reach a resolution that works for your situation. Don’t be afraid to ask for assistance from legal professionals. And take it step-by-step – you’ve got this!
References:
[1] https://www.bankrate.com/finance/credit-cards/what-to-do-when-sued-for-credit-card-debt/
[2] https://upsolve.org/learn/sued-for-credit-card-debt/
[3] https://www.incharge.org/debt-relief/sued-credit-card-debt/
[4] https://www.forbes.com/advisor/credit-cards/what-to-do-when-you-get-sued-for-credit-card-debt/
[5] https://www.nerdwallet.com/article/finance/sued-for-debt-what-to-expect
[6] https://consumer.ftc.gov/articles/what-do-if-debt-collector-sues-you