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What To Do When Credit Card Sues You

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Pay Off Your Balance In Full

When Can a Credit Card Company Sue You?

Before canceling your credit card, pay your balance in full.

If your card has an annual fee, theres generally no reason to cancel early. Instead, wait until the annual fee posts to your cards account or just before. Most banks and credit card companies have a grace period of at least 30 days where you can cancel the card and still get the annual fee refunded. Operating this way, you have the option to call for a possible retention offer after your annual fee posts.

If you do have a zero balance on the card and end up getting your annual fee refunded, you may end up with a negative balance. If this happens, the credit card company will send you a check in the mail. Make sure to make a note of it and follow up to make sure you receive a refund check.

Beware Debt Settlement Services

If youve decided to pay off your debt once and for all, you might come across debt settlement companies when researching how to pay off your debt in collections. Be cautious and avoid them if possible. They often leave consumers in a worse position than when they started out. Plus, debt settlement hurts your credit.

If you choose to work with a debt settlement firm, its crucial you understand what youre getting into. Not all creditors will work with debt settlement companies, and you will have to pay the company a fee for managing the settlement.

A safer and potentially more affordable alternative to debt settlement is a debt management plan offered by a nonprofit organization. With this type of plan, you could work with a certified credit counselor who can help you repay your debt, as well as negotiate with creditors and debt collectors on your behalf to reduce or reverse fees and lower your monthly payments.

What Is A Charge

A charge-off or charged-off account is a debt that has become so delinquent that a creditor decides to remove it from the balance sheet. It means the debt has gone unpaid so long that creditors have assigned it a bad debt status.

When an account is charged off, the creditor writes it off as a financial loss. The account is closed and the debt may be sold to a debt buyer or transferred to a collection agency.

Having a charge-off on a credit report doesnt erase the debt, though. If you have an account charged off as bad debt, youre still legally responsible for paying it. But instead of making payments to the original creditor, you may owe debt to a debt collector or debt buyer.

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Respond To Any Lawsuit

If good-faith efforts dont work, you might be looking at a lawsuit, often the last resort after a series of collection attempts.

Avoiding phone calls will accelerate that process. Sometimes, if a lender decides that collection attempts arent financially worthwhile, the debt can be sold to a collection agency, which means a new set of collectors will go to work on you. Your debt could be sold again and again. If it isnt resolved, a lawsuit is only a matter of time.

If a lawsuit is filed, you MUST respond. If you dont show up for the court proceeding, the judge automatically rules against you and will order you to pay the full amount.

I Am Being Sued For A Credit Card Debt Now What

Sued for Credit Card Debt? Here

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In a Nutshell

A credit card company is suing you for unpaid debts. What do you do? This article explains how to handle a credit card lawsuit, different defenses you can use, and what to do if a judgment is entered against you.

Written byAttorney John Coble.

    A credit card company is suing you for unpaid debts. What do you do? This article explains how to handle a credit card lawsuit, different defenses you can use, and what to do if a judgment is entered against you. This article will also deal with how bankruptcy may be able to help you.

    Recommended Reading: How To Pay Off Credit Card Debt Efficiently

    What Will Happen When You Are Sued By Your Creditor

    The lawsuit will most likely begin when either the creditor or a collection agency files a complaint in court. The complaint is also sometimes referred to as a petition.

    You will be listed as a defendant under the complaint, in addition to anyone else who cosigned onto the loan of the account. The complaint will also clearly state why you are being sued and what the creditor is seeking. Usually, it will be three things:

  • Reimbursement for the amount you owe
  • Interest
  • Reimbursement for the costs of legal action
  • You will then be sent a copy of the complaint in addition to a summons, which will make clear to you that you are being sued so there can be no doubt in your mind as to what is happening. The summons will also indicate when you need to file a formal response to the court.

    Many courts will require the summons to be given to you in person, which will usually be done either by your local sheriff or by a professional process server. If you arent home when the documents are attempted to be given to you, they can be left with another adult in the house or mailed to you instead.

    You will also need to sign a form that comes with the summons as well, which legally acknowledges that you have received the summons and the complaint. Failing to sign this form and return it can result in you paying a process server cost up to a hundred and fifty dollars.

    Common Defenses To Creditor Lawsuits

    This guide provides general information for New Yorkers who are facing debt collection lawsuits in the New York City civil courts.; It does not apply to courts outside the state of New York.; It is not a substitute for obtaining legal advice in your individual case.

    What is a defense?

    Generally, a defense is a reason why the plaintiff should not win its case.; In a debt collection lawsuit, a defense is a reason why the plaintiff failed to prove its case or you do not owe the money.; If one of your defenses is successful, the plaintiff will lose and you will win.

    What is NOT a defense?

    • The reason that you fell behind on your bills.
    • The reason that you cannot pay the debt today.
    • The fact that the creditor or debt collector refused to make reasonable payment arrangements in the past.
    • A statement that you want to settle the case or make a payment agreement.

    Do most defendants have defenses to creditor lawsuits?

    Yes.; One or more of the common defenses discussed below probably applies to your case.; Each of the defenses discussed below if it applies to your case is a reason why the plaintiff should lose and you should win.; If you have questions about whether a particular defense might apply to your case, call the;NYC Financial Justice Hotline at 212-925-4929, or to request assistance.

    What is the best way to present my defenses to the court?

    Defense 1:; Improper Service

    Here are some common examples of incorrect service:

    Defense 2:; Identity Theft or Mistaken Identity

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    Can I Settle The Debt For A Smaller Amount

    Lawsuits can be expensive, which is why most credit card companies and debt collectors are usually willing to settle the debt for a percentage of what is owed. How low they are willing to go depends on several factors, including the age of the debt or whether the debt was the result of a balance transfer.

    Keep reasonable expectations for a settlement. You may be able to settle for anywhere from 35% to 60% of the balance owed, Bovee says. You can try to negotiate and settle the debt yourself or enlist the services of an attorney.

    Check The Timing On Your Card Benefits

    If Credit Card Companies Sue You During Debt Settlement

    Another thing you should check before canceling your card is the timing of any card-specific rewards or benefits. If you have a card with a relatively simple earning structure, like the Citi® Double Cash Card or the Chase Freedom Unlimited®, theres not much to do. However, some other cards have time-sensitive rewards that youll want to consider before closing. For example:

    • Many hotel credit cards like the Marriott Bonvoy Boundless Credit Card* offer a free night on your account anniversary. Check when that free night gets posted into your hotel rewards account to see when it might make sense to cancel the card.

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    What A Collection Agency Can Do

    Collection agencies collect unpaid debts or locate debtors for others.

    A collection agency or collector must:

    • be licensed in Alberta
    • use the name that is shown on their licence in all contacts and correspondence related to their collection activities
    • provide you with information about the original creditor and current creditor of the debt and any details of the debt
    • disclose in writing the fee the agency will charge for a non-sufficient funds cheque before the submission of the cheque
    • provide a receipt for all cash transactions and payments made in person or at your request
    • give you an account of the debt if you ask for it
    • the accounting must include details of the debt
    • agencies only have to give you this information once every 6 months
    • if the agency cannot provide the accounting within 30 days from the request, they must cease collection activity until they can

    A collector can:

    • contact you at home between 7 am and 10 pm Alberta time
    • contact your spouse, adult interdependent partner, relative, neighbour, friend or acquaintance to request your residential address, personal or employment telephone number
    • contact you at work to discuss your debt unless you ask them not to
    • if you dont want to be contacted at work, you must make other arrangements to discuss the debt and you must keep those arrangements
  • contact your employer on one occasion to confirm your employment status, business title and the address of the business in preparation for legal proceedings
  • What If I Can’t Afford To Pay The Judgment

    Many people cannot afford to pay their bills.; If you cannot afford to pay, you may be collection proof.; The judgment is considered uncollectable.; You cannot be punished, fined or jailed if you truly cannot afford to pay your debts.

    But, the creditor has the right to find out if you can afford to pay. A creditor who has a judgment against you can subpoena you to appear at a disclosure hearing.; At this hearing the judge will decide if you can afford to pay the debt.; We have a guide about the Disclosure process: How To: Get ready for a Disclosure Hearing in Maine

    If you are served with a subpoena for a disclosure hearing, you must go to court. If you don’t, the creditor can ask for a civil order of arrest to make you show up at court. They can also ask for an order to garnish your wages. Learn more about Disclosure hearings in our guide.

    Read Also: Do You Get Your Money Back From Secured Credit Card

    Why Have I Been Served

    If you have been served, then it is possibly because you have not paid a debt. According to research by the Consumer Financial Protection Bureau, there is actually a very high chance you don’t actually owe the debt at all. If you do owe the debt, a lawsuit is usually the creditor’s last resort and it means that you have avoided paying a bill for quite a while.

    The summons is essentially your creditor telling you that they no longer want to continue asking you to pay your bills they want to force you to pay them.

    In most states, you are served when you receive a Summons and Complaint document. The Summons tells you that you are being sued. The Complaint tells you why you are being sued. You may be served these documents personally: meaning someone hands them to you. You can also be served these documents in the mail. You may also never be served at all, but through a process called “sewer service” the lawsuit is still filed against you.

    Here’s What Happens When A Credit Card Company Sues You

    What to Do If You Are Sued for Credit Card Debt ...

    If youre sued by a credit card company, youve still got options. In fact, you may be able to settle your debts and escape a lawsuit even if the lender has already filed a claim in court against you, says consumer debt expert;Michael;Bovee.

    When you become seriously delinquent on a debt, and lenders are unable to collect payment through normal channels, they may file a lawsuit against you to recoup the debt.

    If youre sued by a credit card company, youve still got options. In fact, you may be able to settle your debts and escape a lawsuit even if the lender has already filed a claim in court against you, says consumer debt expert Michael Bovee.

    But the clock is ticking. If you dont respond to a lawsuit, you almost always lose. A court can automatically side with the lender, and the lender can use that court order to have your wages or even federal benefits like Social Security income garnished.

    You have a few weeks to get informed about your options, Bovee told MagnifyMoney. Spend time looking at how you can gather funds to pay a settlement for less than what you owe. If you cannot conceivably resolve the debt through settlement, even if buying time through the court process, connect with a bankruptcy attorney and discuss your options there.

    Here are some questions to ask if you are sued by a credit card company.

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    Respond To The Allegations In The Complaint Promptly

    When you are drafting your Answer to the Complaint, it is important to be methodical and address each allegation raised in the Complaint. In most instances, you will want to respond with an admission, denial, or indicate that you lack the knowledge to respond.

    If an allegation in the Complaint is true, you should respond as such in your Answer. For example, if the Complaint alleges you reside at 2121 XYZ Lane and you do reside there, you should respond affirmatively that you reside at that location. Here are some sample Affirm responses that could be used in your Answer:

    • Admit.
    • Defendant admits they reside at the residence listed on the Complaint.

    If, on the other hand, an allegation in the Complaint is untrue, you can affirmatively deny it in your Answer. You should use this option if, for example, you believe the allegations against you are for a debt that is not yours. Here are some sample Deny responses that could be used in your Answer:

    • Denied.
    • Defendant denies using a Target credit card

    If you are unsure of the veracity of an allegation in the Complaint, such as the exact amount you owe or the last time you paid the credit card, you can respond that you lack sufficient knowledge regarding the claim. Here is an example of how to use this response in your Answer:

    • Defendant lacks sufficient knowledge to confirm or deny the information within this paragraph and therefore denies the allegation.

    What Debt Repayment Agencies Do

    A debt repayment agency is a business that charges a fee to act for you in negotiating or making arrangements with creditors for you to pay what you owe. This is a voluntary agreement between the debt repayment agency and your creditors.

    A creditor does not have to accept your payment proposal. Even if a creditor accepts your payment proposal, it can be cancelled if you do not abide by all the terms of the agreement. The creditor can then resume collection activity on your debt.

    The agency must tell you within 30 days of being informed by a creditor that the creditor has decided not to participate in or has withdrawn from a debt repayment program.

    For more information about how debt repayment agencies work, see the Bill Collection and Debt Repayment tipsheet.

    Recommended Reading: How To Protect Against Credit Card Fraud

    What If You Lose

    What happens if you lose your case in court and are therefore found fully or partially liable for the debt that you owe?

    In this case, you have a number of choices available before you. The first will be to fight the judgment, which is where you will claim that you were not notified properly of the case made against you.

    Both Federal law and state law limit how much of your property can be legally seized. If you have little income and property, you can seek to be exempt from the seizure of your property and income to satisfy the debt.

    Another option will be to work with your creditor to develop a payment plan so you can avoid garnishment or other similar drastic actions, and another will be to file for bankruptcy. Filing for bankruptcy is really a last resort option, so it should only be considered in the event that all other options have been completely exhausted .

    The Fair Debt Collection Practices Act

    What To Do When You Are Sued for Credit Card Debt

    The FDCPA protects debtors from abusive behavior by debt collectors. FDCPA protections generally apply to third party debt collectors. The FDCPA doesn’t usually apply to original creditors. Third-party debt collectors include collection agencies and debt-buying firms.

    The FDCPA provides many protections. For example, it prohibits debt collectors from calling you before 8:00 AM and after 9:00 PM. It forbids debt collectors from harassing you. The FDCPA forbids debt collectors from contacting you if you have an attorney representing you regarding this debt. The debt collectors must also stop contacting you if you send them a written demand to stop.

    The FDCPA requires debt collectors to provide you with a written notice informing you of

    • The name of the creditor,

    • The amount owed,

    • That you have a right to dispute the debt, and

    • That you can request the name and address of the original creditor if that creditor is different from the current creditor.

    Debt collectors must send this written notice within five days of the first date they have contacted you. If you dispute the debt within thirty days of receiving this written notice, the debt collector must stop contacting you until they can verify the debt. If you wait until after that thirty-day period to dispute the debt, the debt collector can continue to contact you, but still must verify the debt for you.

    • Repeated phone calls intended to annoy, abuse, or harass you or any other person answering the phone.

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