What to Do If Your Credit Card Company Sues You

Facing a lawsuit from your credit card company can be a daunting and overwhelming experience. When a creditor decides to take legal action, it may feel like you’re running out of options. However, it's important to remember that being sued by a credit card company doesn’t necessarily mean you’ve lost. There are steps you can take to protect yourself and potentially resolve the situation in a way that works for you. In this blog post, we’ll walk you through what to do if your credit card company sues you and how you can take control of the situation.

1. Don’t Panic—Understand the Situation

The first step is to stay calm and not panic. A lawsuit from a credit card company typically happens after you've fallen behind on payments and have ignored attempts to resolve the debt. While it’s a serious matter, being sued doesn’t automatically mean you’re going to lose everything.

Take time to carefully read the lawsuit documents. Look for:

• The name of the court handling the case.

• The amount of money you're being sued for, including any interest or fees.

• The date and time by which you need to respond to the lawsuit.

If you don't understand the legal language, consider seeking help from a legal professional to explain your situation.

2. Respond to the Lawsuit Within the Required Timeframe

If you’ve been served with a lawsuit, it’s important to respond before the deadline specified in the documents. Ignoring the lawsuit could lead to a default judgment, meaning the credit card company automatically wins the case, and you may face wage garnishment, bank account levies, or other legal consequences.

In your response, you can either:

• Agree to the debt and work out a settlement or payment plan.

• Dispute the debt if you believe it’s incorrect or you don’t owe the amount claimed.

Failing to respond could result in a judgment being entered against you, which can significantly affect your financial situation. If you don’t know how to respond, consider consulting an attorney.

3. Examine the Debt for Accuracy

Before taking any action, it’s important to make sure that the debt is accurate. Review your credit card statements, records, and any communication from the credit card company to verify the amount being sued for. Errors do happen, and you may find discrepancies that can help your case.

Here are some things to check for:

• Is the amount being claimed correct?

• Have fees or charges been added that shouldn’t have been?

• Is the lawsuit based on the right credit card or account?

• Has the debt been transferred to another party or sold to a collections agency?

If the debt is incorrect or outdated, you may have grounds to dispute the lawsuit.

4. Consider Negotiation or Settlement

Credit card companies often prefer to settle outside of court rather than pursue a lengthy and costly legal battle. If you owe the debt but are struggling to pay it, you may be able to negotiate a settlement with the creditor or their attorney. Settling the debt for a lesser amount could save you money and prevent further legal complications.

Negotiation options might include:

• Lowering the total amount due. You could offer a lump-sum payment or a payment plan that works within your budget.

• Reducing the interest or fees. Creditors may be willing to work with you if you show that you're committed to paying, even if you can’t pay the full amount.

• Avoiding further legal action. You may be able to prevent a court judgment by coming to a settlement agreement with the creditor.

Be sure to get any settlement agreement in writing before you make a payment. This will protect you from the creditor coming after you for more money later.

5. Explore Debt Relief Options

If your financial situation is dire and you're unable to negotiate a settlement or afford to repay the debt, you might want to consider debt relief options such as:

• Debt Management Plans (DMP): These plans are set up through a credit counseling agency, which negotiates with your creditors on your behalf to lower your payments and interest rates.

• Debt Consolidation: This involves taking out a new loan to pay off your existing credit card debt, simplifying your payments and potentially lowering your interest rate.

• Bankruptcy: In more severe cases, bankruptcy may be an option to discharge your credit card debt and stop the lawsuit. Chapter 7 or Chapter 13 bankruptcy can provide protection through the automatic stay, preventing creditors from taking further legal action against you.

It’s important to weigh all of your options and consult with a financial advisor or attorney before proceeding with any of these strategies.

6. Know Your Rights—Defend Yourself if Needed

If you decide to fight the lawsuit, be aware of your rights as a consumer. The Fair Debt Collection Practices Act (FDCPA) and other laws protect you from abusive tactics, and you can challenge the lawsuit if there are any irregularities in how the creditor has handled the case.

Some possible defenses include:

• The debt is not yours. If you can prove that you didn’t open the account or are not responsible for the debt, this could be grounds to have the case dismissed.

• The statute of limitations has expired. Each state has a statute of limitations on how long a creditor can sue you for a debt. If the credit card company is suing you after this period has passed, you can have the case dismissed.

• The creditor did not follow proper legal procedures. Creditors are required to follow certain steps when suing you. If they failed to do so, you may have a case.

If you choose to fight the lawsuit, it’s highly recommended that you hire an experienced attorney to represent you in court.

7. Prepare for a Court Hearing

If the case proceeds to court, it’s important to be well-prepared. Bring all relevant documents, such as:

• Your credit card statements.

• Payment records.

• Communication with the credit card company.

• Any correspondence from the court.

Present your case clearly and respectfully to the judge, and provide evidence to support your defense or any settlement proposal you’re willing to make.

8. Take Action Early—Don’t Wait

The sooner you take action in response to a lawsuit, the more options you’ll have. Waiting until the last minute may limit your ability to negotiate or settle the debt. By responding quickly, understanding your rights, and considering all available options, you can find a solution that works for you and avoid more serious consequences like wage garnishment or a judgment against you.

Conclusion

Being sued by your credit card company is certainly a challenging situation, but it’s not the end of the road. By understanding the legal process, responding appropriately, and considering settlement or debt relief options, you can take steps toward resolving the issue without letting it derail your financial future. Whether you settle the debt, defend yourself in court, or explore other options like bankruptcy, it’s crucial to stay proactive and take action as soon as possible.

If you're unsure how to handle the situation, consider consulting a bankruptcy or consumer debt attorney who can provide personalized guidance and help you make the best decisions for your financial well-being.