Credit card debt is complicated. With high interest rates and hidden fees, it’s not hard to fall behind on your payments. Moreover, any type of hardship may cause you to default on your credit card debt. Defaulting on this debt is when problems begin to grow exponentially. Your debt is sold to debt collectors, and the collection process begins. Eventually, you may notice a court summons with details about a lawsuit in the mail. So, what can you do?
While credit card companies and debt collectors can sue you, that doesn’t mean you have to go to court. We’ll take you through the process of what happens with a debt collection lawsuit and how you can proceed. While our information is in-depth, we always recommend connecting with a lawyer if you have serious concerns about your debt collection lawsuit.
Read on to learn more below.
Can a Credit Card Company Sue You?
Yes, you can be sued for credit card debt. That said, most lawsuits don’t come directly from a credit card company. Instead, you’re more likely to be served by a debt collection agency. Debt collection agencies purchase defaulted debt from credit card companies to get the person who owes money to pay for it.
In many cases, you can settle for less than the full amount a debt collection agency contacts you. However, ignoring debt collectors usually results in a lawsuit. This becomes even more likely when a lot of money is at stake (a few thousand dollars or more).
1. How Long Does It Take for a Credit Card Company To Sue You?
Credit card companies can sue you for delinquent debt after a period of 180 days. After 180 days of not paying a credit card, it becomes delinquent. Delinquent accounts can be sold off to debt collectors, or the credit card company can begin the process of a lawsuit. In most cases, credit card companies will sell the debt instead of taking you to court.
Once the debt is sold to a debt collection agency, the clock starts ticking. At first, the debt collection agency may send you notices about your delinquent debt. Ignoring these notices will cause the company to sue you. That said, the lawsuit process isn’t concrete. Some debt collection agencies will come after you aggressively, so you may see a lawsuit for credit card debt within the first year of being delinquent. On the other hand, some companies will pester you with phone calls and letters for a few years before suing you. Unfortunately, it depends. The best answer we can give you is between 180 days and two years.
2. What Does a Credit Card Debt Lawsuit Look Like?
Credit card debt lawsuits are straightforward compared to some other types of lawsuits. Typically, you’ll receive a summons letter in the mail or delivered to your door. The summons will contain information like:
- The plaintiff: The debt collection company or credit card company that’s suing you.
- Defendant: You or the person who’s being sued by the debt collection or credit card company.
- Co-defendant: Co-signers and other people attached to the credit account.
- Amount owed: How much money is owed on the account. This includes the credit balance, fees, and interest on the account.
- Date of the hearing: When the first court hearing will take place. The location is also provided.
- Directions for response: Instructions for how to respond to the lawsuit or complaint.
In any lawsuit over money, this information is usually what the lawsuit contains.
How To Respond to a Credit Card Lawsuit?
Lawsuits about credit card debt are never a fun thing to go through. The good news is that you can follow a few quick steps to ensure that the lawsuit is accurate about what you owe. Following the steps we take you through below also helps you appear active, responsible, and someone worth negotiating with. Remember, never ignore phone calls or mail because it makes you appear negligent. Here are some things to consider when responding to a credit card lawsuit.
1. Make Sure the Lawsuit Is Accurate
The first thing you need to do when being sued for credit card debt is to check if the lawsuit is accurate and includes all of the relevant information. Large companies make mistakes all the time, especially debt collection agencies that manage thousands of accounts. Instead of rolling over and letting the company come after you, play some defense first. You’ll want to check a few things, including:
- The status of the debt: Is this debt that you paid off already? Reply stating that you paid the debt, and the court case comes to an end.
- The statute of limitations has passed: Depending on your state, the statute of limitations is 4-6 years for credit card debt, which begins after your last payment. If the statute of limitations has passed, include this in your response.
- Bankruptcy: Have you filed for bankruptcy in the past to wipe out debt? If so, you can’t be sued for old debts that were removed.
- Wrong person: Notice something off about the name or personal information on the lawsuit? They might have the wrong person, and you can challenge them to fix the issue. This may also be a case of fraud. Check to see if your identity was compromised to form a response.
- Fair Debt Collection Practices Act (FDCPA): This is a law that provides guidelines for how collection agencies can go about collecting debt. Check to see if the agency is collecting properly and take notice if they make mistakes.
When you notice any of these issues with a lawsuit, it’s a good time to send a response that includes getting your debt removed. Always look for loopholes and anything else you can to settle or remove the debt outside of court.
2. Always Respond to the Lawsuit
The next factor to consider is your response. When it comes to lawsuits, it’s important to respond. Responding to a lawsuit ensures that you can’t be caught off-guard or have any judgments go against you without mounting a proper response. For example, failing to respond to a credit card lawsuit may lead to judgments against you. These judgments may result in liens or other problems that could have been avoided.
When responding to a lawsuit, there are a few things you should consider. The most important thing is to never ignore phone calls. Having conversations with debt collection agencies shows that you’re not negligent, which will help you if the case goes to court. You don’t have to answer 100s of phone calls but stay in contact with the collection agency for the best results.
Next, know your rights. Learn about the laws in your state that pertain to debt collection agencies. Some examples include laws requiring debt collection companies to validate your debt five days after contacting you. Also, collectors must send proof of the debt if you request validation. These are only a few laws, and each state has a unique process for handling these situations—always keep this in mind.
3. Speak With a Lawyer
Speaking with a lawyer for big cases of credit card debt is essential. However, you can also benefit from a conversation with a lawyer in smaller debt collection cases. Ultimately, it depends on your situation, but lawyers will be helpful in just about any circumstance.
Below we list some reasons to hire a lawyer for your credit card debt case.
- Lawsuits with a lot of money may make you uncomfortable when it comes to representing yourself or taking the best course of legal action.
- You have a lawyer with a lot of experience in civil cases.
- Lawyers will advise you on guidelines outlined by the Fair Debt Collection Practices Act.
These are only some of the reasons to hire a lawyer, and it’s important to understand that situations vary, especially with lawsuits.
There are also situations where you should avoid hiring a lawyer for credit card company lawsuits. The best example is a case where you’ve kept good credit records, and the amount of debt is less than the price of a lawyer. In this example, you’re better off paying the debt out of court instead of getting a lawyer. Another example is a situation where you’re confident that you can defend yourself. Other than these rare examples, we recommend getting a lawyer to help.
The last thing to do before you respond to a debt collection notice or lawsuit is to come up with a plan. Planning is part of the process, and a good plan, perhaps involving something like what is considered to be the best debt relief program out there, can help you get out of some tricky situations. Hiring a lawyer or speaking with a credit counselor may help you during the planning process. That said, most plans come down to a few options. These options include:
- Settling the debt: You settle out of court with the credit card company or collection agency. Settlements are usually for less than the full amount of debt owed.
- Bankruptcy: Filing for bankruptcy if you can’t afford your debts, is also a valid plan if you have no other options. Speak with a lawyer to determine the type of bankruptcy that’s right for you.
- Go to court: If you feel comfortable defending your case and the amount of money you owe, you can fight the case in court. This becomes risky, especially when a lot of capital is involved.
- Challenge the right to sue: The last option is to go on offense. Challenge the credit company’s right to sue you by making them account for every dollar they owe you.
There may also be some other routes you can take in your response, but these are the most common options. If you have a different plan or want to go a different route, consult with a credit counselor or an attorney.
In some cases, going to court over credit card debt is unavoidable. Thankfully, you don’t have to panic if you come prepared. There are usually three outcomes that occur in court when you go over credit card debt. These include dismissal, winning, and losing. More about each outcome is below.
Winning a court case is the best outcome for the defendant, especially in cases of credit card delinquency. You’ll be absolved of your credit card debt and may notice an improvement in your credit score. What’s more, you can decide to go after the credit card company for suing you. This means you can claim damages for the legal costs that you spent on fighting this case. Depending on the circumstances and if you hired a lawyer, going on offense may not be the worst idea.
Losing in court is the worst outcome of going to court over credit card debt. When you lose in court, you’re at the will of the debt collection agency or credit card company. They can ask the judge to collect your money in several ways. Many cases will result in wage garnishment, liens on property, or forcing your property to be sold.
What comes with losing in court often varies based on your state. That said, it can get pretty bad. If you feel like you’ll lose in court, we recommend settling out of court when possible. In situations where a lot of money is at stake, it’s also wise to hire a lawyer.
Court cases that are dismissed usually work in the defendant’s favor. The judge throws the case out, and the credit card company doesn’t get their money. Unfortunately, this doesn’t always stop them from bringing you to court again. In many cases, credit card companies will sue you again once they can. To avoid this problem, make sure it’s a dismissal with prejudice. Dismissals with prejudice ensure that the plaintiff can’t sue you over the debt again. This will also improve your credit in the long term.
If you’re unsure about your chances in court, always consult with a lawyer to get the outcome you prefer. You won’t always win, but you have a better chance.
How To Know if You Have a Pending Lawsuit Against You?
In some cases, you can get ahead of a debt collection lawsuit by being one step ahead of the game. Therefore, knowing if you have any pending court dates or judgments against you will prevent you from getting caught off-guard. You can check for almost anything, including liens, judgments, bankruptcies, etc. Below we show you how to use Information.com’s criminal records search tool to learn more about yourself.
1. How To Search Your Public Records or Criminal Records?
Searching your public records isn’t hard when you have the right tools. While it’s possible to rely on a Google search for information about yourself, it’s not the best method. In fact, you may not find anything you’re looking for because most court records aren’t available through a standard search on Google. Fortunately, websites like Information.com have tools that you can leverage to find the information you need.
Using Information.com’s criminal records search tool is as straightforward as following the steps below.
- Navigate to Information.com‘s criminal records search tool.
- Enter your first and last name, address, city, and state.
- Select Search.
- Scroll through the search results until you find your name and information pertaining to you.
- Open the Full Report.
Once you open the report, you’ll have access to your public records. Information from Information.com is sourced from thousands of databases across the United States, so there’s a good chance that you’ll find what you’re looking for. This includes your court records, pending court cases, judgments, bankruptcies, and much more.
2. Check Your Credit Report
Your credit report is one of the best places to visit to determine if you have a lawsuit against you. You can check your credit report with agencies like Experian or Credit Karma. Many banks also have tools you can use to check your credit report. Banks like Capital One and JP Morgan Chase are some of the best resources for baking apps or websites.
On your credit report, you’ll find out if you have any credit lines that are delinquent. This won’t tell you if you have legal action pending against you, but it gives you insight into potential court cases that may occur in the future because of unpaid debt. Plus, it shows you which accounts are delinquent, so you can reach out to them.
3. Go Through Your Mail
There’s nothing more annoying than a giant pile of mail. Some people are also quick to throw away mail from credit card companies because they’re mostly advertisements or trying to sell you a new credit card. However, you may want to check your mail to determine if you have legal actions against you; even if you don’t, check to see if mail from a credit card company isn’t a promotion but a summons or pending court case.
These are the best ways to determine if you have a court case open against you. Plus, they may help you get ahead of the problem.
Settling debt for a credit card lawsuit isn’t always easy. Matters become much worse when companies refuse to negotiate with you. The good news is that there’s no need to panic. We have your back with some tips for settling credit card debt.
1. Budget for Debt Repayment
First and foremost, have a look at your budget. Check to see how much cash you have available and if there are some assets you can use to repay your debt. Avoiding court is always the best option, and most companies will settle, so we recommend making a budget for repaying the debt. Consider additional money you may have lying around, like cash you have set aside for a vacation or an emergency fund. After all, debt repayment is an emergency if you want to avoid legal problems.
2. Make a Big Payment
Whether you can pay the debt in full or come to a settlement agreement, making a big payment increases your chances of resolving a debt. In the case of a settlement, you may be able to pay less than you owe if you offer enough money as a lump sum. Furthermore, making a big payment can prevent a collection agency from taking you to court in the first place. This is because you can work something out, even if the collection agency doesn’t want to settle at first.
3. Ask for a Payment Plan
Payment plans are also possible. You’ll find that payment plans make it easier to pay for debt that you otherwise couldn’t afford. A good payment plan ensures that you can make smaller payments over a long period. For some, this makes it easier to manage the payments and still keep a savings account. This is usually what will result from contacting a collection agency and settling. As long as you’re proactive about paying the debt, there’s a good chance that the collection agency will go easier on you.
Following these tips will help you repay the debt without going through the process of court. If you do end up in court, some of these options may still apply. However, we recommend reaching out to creditors before you get sued. Doing so gives you more flexibility.
Nobody wants to be sued or drown in debt. The unfortunate reality is that millions of people are sued for their debts each year, and there’s not much you can do if you’re unprepared. The good news is that tools like Information.com give you an advantage when you’re working with debt collectors and the courts. Knowing what’s coming your way can help you plan a defense, appeal any debt you believe is wrongfully owed, or hire a lawyer—if necessary.
For these reasons, we always recommend running a public records search on yourself at least once per year. Even if you don’t have debt, it’s important to keep an eye on your credit and personal information to see if anything changes. Overall, running a search with a tool like Information.com’s criminal background check tool may save you thousands of dollars in the long run.