What to Do If You Are Sued for Credit Card Debt
For example, when you default on credit card debt, the major consequence could be a lawsuit.Hold on. Can a credit card company sue you? Yes, it can.
Make Sure You Actually Owe
Don’t assume the credit card company is right. Giant corporations aren’t infallible. You might not owe a penny. You might be a victim of identity theft. Or, the debt you once owed can no longer be collected. Don’t let yourself be bullied.
- Statute of limitations has run out —Every civil lawsuit must be filed within a certain time frame. The statute of limitations vary from state-to-state, but most are in the 4-6 year range. The clock starts ticking on your case the date of your last credit card payment. If the complaint was filed with the court after the statute of limitations ended, the lawsuit should be dismissed, but only if you show up in court that day and tell the judge the statute of limitations expired.
- Fair Debt Collection Act —It’s a federal law that requires debt collectors to provide information about your debt. If the company violated provisions, you can countersue. Read the law at https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text
- Fraud —Someone could have stolen your identity or your credit card and made unauthorized purchases.
- Mistaken identity —Perhaps you never signed up for the credit card or had any business with the company. It’s wise to run a free credit report to see if an account was opened in your name.
- Bankruptcy —If you filed for bankruptcy and your credit card debt was wiped out, that’s a viable defense.
- Shoddy bookkeeping —According to the New York Times, which published a series of stories beginning in 2012 that tracked collection tactics of credit card companies, a New York state civil court judge said “90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt.’’
What to Do if You Owe the Debt
When you’re sued, you’ll be served with a copy of the complaint and a court summons that tells you how you can file a response in court and the date of your court hearing. You have roughly three or four weeks to respond, which means you need to act quickly. Some of your options, like offering to settle the debt, can happen out of court. Others will require you to respond directly to the suit or use bankruptcy court.
Respond to Any Lawsuit
If good-faith efforts don’t 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 aren’t 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 isn’t resolved, a lawsuit is only a matter of time.