What To Do When You Get Sued For Credit Card Debt

Many people have trouble paying their credit card debts — but those unpaid bills can do more than just bury you in debt. They can also lead to lawsuits. An occasional missed credit card payment might lower your credit score or raise your interest rates, but after four or five months of missed credit card payments, your credit card issuer might turn your account over to a debt collector. If you continue to ignore your debts instead of settling them, the debt collector might sue you.

Can a credit card company sue you?

Can debt collectors sue you and take you to court? Absolutely. How often do debt collectors take you to court? Generally, debt collectors don’t issue a court summons unless they’ve already made other attempts to collect on the debt. Suing someone over an old debt is the last step in the debt delinquency timeline, not the first one.

Here’s the good news — you can’t go to jail for credit card debt, and if a debt collector implies that you might end up in jail, they are breaking the law as established by the Fair Debt Collection Practices Act.

The bad news is that receiving a court summons for credit card debt can be stressful, time-consuming and frustrating.

Let’s take a look at what you should do when you are sued for credit card debt, including how to handle the court summons and settle credit card debt before going to court.

What is a court summons for credit card debt?

A court summons for a lawsuit notifies you when you are being sued — in this case, for credit card debt. The nature of a debt collection lawsuit will vary depending on the state in which you reside. However, once an attorney files a complaint in state civil court, you’ll receive a summons that will include the following:

• The plaintiff who is suing you and any co-defendants (such as a joint card holder)
• The total amount of money the plaintiff wishes to collect
• The date of the hearing
• Instructions on how to file a formal response

How to respond to a court summons for credit card debt

Getting a court summons for credit card debt can be nerve-wracking, but stay calm. Knowing how to deal with debt collectors can help you manage your anxiety and might even help you beat your debt collector in court.

Here’s how to respond when you are sued for credit card debt:

1. Don’t ignore the summons

When you get a court summons for credit card debt, pay attention to it — and make a plan of action. In many cases, you’ll have 20 to 30 days to respond to your summons, so read it carefully to learn exactly how much time you have to develop your plan.

You might be tempted to ignore your court summons, either because you don’t think the debt collectors have the right person or because you’re trying to get out of debt without paying, but that’s never a good idea. If you ignore your summons, the court is likely to rule in the debt collector’s favor and your wages could be garnished until you pay back the amount of money that the court rules you owe.

2. Verify the debt

If you are sued for credit card debt, your first step is to verify that the debt is actually yours. The Fair Debt Collection Practices Act requires debt collectors to provide a validation letter listing specific details about the debt, including the current creditor and the amount of debt owed. This letter must arrive no later than five days after the initial communication on the debt.

If you do not believe the debt is yours — or if you don’t know whether the debt is yours — you have the right to request additional information. Write a debt verification letter asking your debt collector to confirm you owe this debt. You could request the name of the original creditor associated with the debt, for example, or ask the debt collector to confirm that the statute of limitations on the debt has not expired.

What to do if it’s not your credit card debt

By the time an unpaid debt turns into a court summons, it has already passed from the initial creditor to at least one debt collection agency. Sometimes, your debt has been handled by multiple debt collection agencies, each one selling or passing your debt along until one of the agencies decides to take you to court.

This means that there are a lot of opportunities for mistakes. The debt could actually belong to someone with a similar name, or someone who previously lived at your address — or the debt could be the result of identity theft.

In these cases, you might be able to use your debt verification letter to prove that the debt is not yours. If that doesn’t work, you might need to fight the debt in court.

3. Consider debt settlement

If you have good faith that the debt is yours and that the statute of limitations has not expired, consider settling your debt instead of going to court. Going to court for credit card debt can be time-consuming and expensive, and many debt collectors are more than happy to negotiate a debt settlement plan instead.

4. Contact an attorney

Whether you plan to pay off the debt or fight it, you’re going to want to contact an attorney. A good lawyer can help you negotiate a fair debt settlement plan with your debt collectors or talk to you about how to beat a debt collector in court. Many attorneys offer free consultations, which can be helpful during times of financial strain. However, it’s unlikely that actually hiring an attorney would be free, so be sure to factor that in when you reach out to them.

How to get a credit card lawsuit dismissed

Those who have gotten their lawsuits dismissed successfully typically start by responding to the court summons and verifying the debt, as well as collecting any needed documentation. After that, they move on to:

• Filing a motion to dismiss the lawsuit: If the lawsuit is invalid — because the statute of limitations on the debt has passed or the creditor can’t prove the debt belongs to who they’re suing, for example — then the debtor can file to have it outright dismissed.
• Settling the debt out of court or drafting up a new debt contract: Doing this means that the debt collector no longer has any need to go to court.
• Filing a counterclaim: If the debt collector has engaged in wrongful practices while trying to collect debt, then the debtor can use that information to file a counterclaim, which can result in getting the lawsuit dismissed. Common wrongful practices include falsely implying that the debtor committed a crime, using false or deceptive means to collect or attempt to collect debt and harassing or threatening debtors or their property.

Tips on settling credit card debt before going to court

If you are being sued over an old debt, negotiating a debt settlement is a smart move. A lot of people don’t realize that debt settlement is one of the best debt relief options out there, and creating a debt settlement plan while working with an attorney or certified credit counselor is often much better than going to court over credit card debt.

Here’s how to settle credit card debt before going to court:

Look at your budget

Start by examining your budget or making one. How much money can you put toward your debt each month? Is it possible to pay off a large amount of your debt at once, maybe by pulling money from a recent cash influx, like a tax refund or work bonus?

Work with a certified credit counselor

Certified credit counselors from nonprofit agencies can help you dive deeper into your finances and come up with a plan to get out of debt. While these counselors won’t settle your debts on your behalf, they will offer advice and help you create a realistic budget to go with your repayment plan.

Request a payment plan

One debt settlement option is to create a payment plan that allows you to pay off your debt over time. If you can turn your debt into another monthly bill, you might be able to pay it off in full and satisfy your responsibilities to the debt collectors.

Make a lump-sum payment

Your other debt settlement option is to make a lump-sum payment on your debt. Some debt collectors will allow you to settle your debt for less than the amount owed, as long as you are able to pay off the entire settlement at once. If you have enough money to make a significant payment on your debt, the lump-sum plan could be your best option.

Don’t worry too much about your credit score

Even if you’re able to settle your debts or come up with a debt management plan that will help you pay it all off, your credit score will still suffer as a result of the derogatory marks added to your credit report.

However, getting out of debt will put you on the path to better credit, even if your score takes a significant hit during the process. While it’ll take several years for those derogatory marks to fall off your credit card report, you can start working on your credit score long before then. There are plenty of ways to rebuild your credit, and it’s much easier to do so when you don’t have debt hanging over your head.

The bottom line

If your credit card debt feels overwhelming and you’re having trouble making payments, you have options. A balance transfer credit card with a strong introductory APR offer, for example, could help you consolidate your credit card debt into a single monthly payment. Bankrate’s credit card debt resources can help you learn more about debt relief options like credit card hardship programs. They can also help you find ways to manage your debt so you can hopefully avoid getting a court summons from a debt collector in the first place.

If you do find yourself with a court summons, don’t ignore it. Verify that the debt is yours, then make a plan to handle the situation. An attorney can help you understand your rights as you deal with the summons.