What to Do When You Get Sued for Credit Card Debt
Getting sued over unpaid credit card debt can be scary and overwhelming. But there are steps you can take to respond appropriately and try to resolve the lawsuit.
Don’t Panic – You Have Options
The first thing is – don’t panic. Take a deep breath. Getting a court summons regarding debt feels serious, but it doesn’t mean your life is over. There are always options, and you may be able to resolve the debt without going to trial. The key is educating yourself on the process and your rights so you can respond effectively.
-Understand Why You’re Being Sued
Credit card companies can sue to collect when you’ve fallen significantly behind on payments. Often they’ll sell the debt to collection agencies first. And if the agency can’t collect, they may file a lawsuit to try and recover what you owe by garnishing wages or putting liens on property.The goal is getting paid – not ruining your life. Creditors just want their money back and the legal system gives them a method to pursue it aggressively. It’s not personal even though it feels that way.
Respond to the Summons Appropriately
The first step is responding formally to the court summons by the deadline stated. If you ignore it completely, the creditor will likely get a default judgment against you. This allows them to seize assets, garnish wages, put liens on property, and more.So your goal is avoiding default by filing an “answer” that formally responds. In the answer, you can choose to admit, deny, or state you lack sufficient information to respond to each segment. An attorney can help craft your response appropriately.
Consider Whether Bankruptcy Makes Sense
Filing bankruptcy stops collections lawsuits in their tracks by triggering an automatic stay. And it can eliminate credit card debts entirely in some cases. Talk to an attorney to see if it may be a good solution. The downsides are it damages your credit and can only be filed once every 8 years.
Negotiate a Settlement
You may be able to settle by negotiating payment of a lump sum that’s less than the full amount owed. Many creditors accept 50% or less to avoid the court costs of a trial. Get any deal in writing before paying to ensure debts get formally dismissed and removed from credit reports after paying.
Assert Consumer Protections
Review the complaint and your credit report to determine if there are any violations of consumer law you can assert. Examples include…
- Statute of limitations has expired – Most states limit how long creditors can sue to collect after debt becomes delinquent. If the statute of limitations has passed, assert this defense.
- Incorrect information reported – If the reported amounts owed or dates of delinquency are incorrect, dispute them with the credit bureaus. This evidence may help fight the suit.
- Failure to validate debt – Debt collectors must provide written validation of debts if requested under federal law. If they can’t produce it, potentially the case can get thrown out.
- Unfair practices – If collectors harassed you with excessive calls or threats, violated other consumer protections, use this as evidence to try and get the case dismissed.
Seek Free Legal Aid
Non-profit legal aid organizations provide free assistance to low income individuals facing debt lawsuits. FindLaw has resources to locate an aid clinic near you. They can help defend the lawsuit or negotiate settlements.Getting sued over credit card debt feels dire but strategic responses can help resolve it. Educate yourself on consumer protections, consider bankruptcy pros and cons, seek affordable legal help, and explore settlement options. The key is avoiding default judgments against you while working to eliminate debts through legal means. It may take time and effort but you can overcome this challenge.
Frequently Asked Questions
Should I ignore a debt lawsuit summons?
No, ignoring the summons allows creditors to get a default judgment against you easily, enabling them to seize assets and garnish wages to settle debts. Respond formally by the deadline to preserve defenses.
What if I can’t afford an attorney?
If income eligible, seek free legal aid from non-profit clinics. If not, some attorneys provide low cost flat-fee services or let you pay in installments. Comparison shop for most affordable representation.
Can debts get dismissed on technicalities?
Potentially yes – many collection lawsuits have technical flaws like missing documentation or incorrect data. Assert flaws through an attorney’s assistance to seek case dismissal if errors exist.
What percent settlement is typical?
Many creditors settle pre-trial for 50% or less of the unpaid balances. But the amount depends case-by-case based on state laws, how far behind debts are, whether suits have merits, and other factors.
Can my wages get garnished?
If you lose in court, creditors can seek to garnish wages to repay debts. Federal law protects 75% of wages or 30 times the minimum wage per week, whichever is more. But state laws can further limit percentages creditors take.Let me know if you need any clarification or have additional questions!