Steps to take if credit card company sues you

Recently on our bankruptcy forum a user asked, “I have over $20,000 in credit card debt that I cannot pay. I tried to negotiate with the credit card company, but they refused. After several months of nonpayment I have found out that they have filed a lawsuit against me. Is this legal?”

Credit card debt is unsecured debt, which means there are no assets or personal items which collateralize the debt. Therefore, if the credit card company wants to recover the money you have borrowed they do not have assets such as a house or car that they can come and repossess and sell. Instead, if they want to collect the money owed they will have to file a lawsuit against you and obtain a judgment from the court.

The methods credit card companies can use to collect their debts vary by state. For example, in the State of Texas, a credit card company cannot garnish your wages. Other states, however, do allow wage garnishments for credit card debts. If you have any questions about what methods are allowed in your state you will need to review your state’s laws.

Will the credit card company get judgment?

Taking the right steps after a lawsuit has been filed against you may be enough to stop the lawsuit or get the credit card company to consider settling. General steps you should take include the following.

  1. Always respond to the complaint.

Most credit card companies will be able to get a judgment. Not because they have a valid claim, but because the consumer fails to respond to the notice, called a Summons and Complaint. So the first step to fighting a credit card lawsuit is to respond to the complaint so the court does not issue a default judgment against you.

Respond to the complaint by filing an Answer within the specified timeframe in the court where the suit has been filed. Just by filing an answer the credit card company may decide to offer a negotiated settlement, which could save you a great deal of money.

  1. Determine if the company has the right to sue.

Another option after the lawsuit has been filed, assuming your debt was sold to a collection agency, is to ask the company to prove they have a right to sue- referred to as “standing.” If the collection agency does not have proper standing the court may throw out the case.

Next, make sure to ask for the original signed agreement and the balance on the account. It’s not unusual for the creditor to be missing information. If this is true, you may be able to challenge whether or not you owe the amount suggested.

  1. Verify they have filed the claim within the statute of limitations.

Finally, make sure the lawsuit was filed within the specified statute of limitations. If the credit card company waits too long to pursue the debt they will eliminate their right to collect or to sue for a judgment.

Bottom line:

If you have credit card debt it’s important to contact the credit card company and find out if you can negotiate a settlement. If they file a lawsuit be sure to respond and make sure they have proof of the debt owed.

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Beth L. is a content writer for Better Bankruptcy. Good content and information is one of many methods we utilize to bring you the answers you need.