Credit Card Company Sues You: First Steps

Can a credit card company sue you?   And what can I do about this legal action? These are questions we get quite often at our law office.

Being served with a lawsuit for unpaid credit card debt is a startling and scary experience. Whether you’ve been served by the original creditor  (the credit card company) or a debt buyer, you should not delay seeking counsel. Doing so could result in a default judgment against you. This is a grim prospect. Fortunately, you can avoid it by taking these simple steps.

Step 1: Do Not Panic

Though this experience is new to you, it’s more common than you might think. According to the National Consumer Law Center , in one recent year, around 70 million Americans had or were contacted about a debt collection, with 15% of consumers actually being sued for debt .

Though these numbers sound grim, there’s a silver lining here. These statistics mean you’re definitely not alone. Because this a more “common” legal matter, law offices are well equipped to help you prepare your case. That includes us here at Warren & Migliaccio.

Step 2: Consult with a Credit Card Debt Attorney

Unfortunately, not every person being sued for credit card debt takes timely action to mount a defense. As we mentioned above, it is not wise to do nothing when a credit card company sues you, as inaction inevitably leads to a default judgment against you. Once that happens, the consequences set in.

Common methods taken post-judgment to collect money from you may include :

• levying your bank account
• wage garnishment in limited circumstances
• forced sales of possessions
• property attachments
• property liens
• property levies
• plummeting credit score on your credit report

Additionally, default judgments can result in the debt collector’s award of additional money, including interest, court costs, and attorney’s fees.

Fortunately, matters need not lead to such extremes. By consulting with legal counsel, you can create a strategy by which you can respond to your summons properly.

Step 3: Properly Respond to Your Debt Lawsuit

A debt defense attorney will best know how to respond to your debt collection lawsuit.  Here in Texas, that starts with filing a written response to the allegations against you. Even if you should choose to represent yourself in such a case, this response isn’t just something you can simply throw together and submit via e-mail. In drafting your answer, you will need to follow the standard procedures for drafting and filing a legal response and submitting it at the County District Court or Small Claims Court (Justice of Peace Courts).

Knowing what information to include, what not to include, and how to form your response in a way that will effectively represent your situation and sway the court to your side is something a skilled attorney will know how to do. Consulting with one to help you respond to your Debt Collection Lawsuit is perhaps the most important step you can take in handling your credit card debt case.

Debt collectors often buy questionable unsecured debt and secured debt from others, paying pennies on the dollar for these debts. There is often no guarantee that these debts are valid or collectible. The debt collection agency takes this risk with the perceived reward being that many consumers won’t answer legal complaints and will get default judgments against them. They’re betting on you not responding. Don’t let them win that bet.

Gaining help in responding to your summons can result in:

• no more debt collection calls from credit card companies and their collection agencies;
• a swift and effective resolution of your case, often including discounted debt settlement and a reasonable payment plan to allow for repayment over time;
• an actionable plan if your case warrants fighting the legal action to get your case dismissed; and/or
• a path back to stable finances and a restored credit score

Responding to your summons properly, in a timely way, and with the advice of experienced legal counsel is the surest step you can take toward seeking a positive resolution for your case.

Step 4: Record Communications

Just because you are being sued does not mean you forfeit your rights. Debt collection companies must follow various federal laws, including the Fair Debt Collection Practices Act and Fair Credit Reporting Act, in addition to state consumer protection laws. It is possible that the debt collection company that is suing you has violated your rights, which can provide you with leverage and the possibility of filing your own claim against them.

Keep a log of the contact you have received from the debt collection company. Write down the date of the contact, the information discussed, the agent’s name, and any other identifying information. Keep all original letters and other forms of communication. Provide this information to your lawyer.

Step 5: Review Your Records

Because debt collection is rampant with errors, it is important that you review your own records in an effort to lodge a defense in the case against you. View your old statements and make sure the charges were actually yours. Compare this information with what the debt collector claims you owe. You can also ask the debt collector to provide evidence that you owe the debt, the debt amount is accurate, and you owe the debt to them and not someone else. It is possible that you could have paid the debt to another collector, that you do not owe the debt, or the debt is not collectible.  You should also check your credit report on a website like Credit Karma to confirm this is not an old debt you already resolved.

Related: Can I Be Sued Twice for the Same Debt in Texas?

Step 6: Explore Your Options

If the debt is valid, you may still have several options. The debt collector may prefer to settle directly with you rather than be involved in prolonged litigation. Your credit card debt lawyer may be able to negotiate a settlement in which you pay much less than what you owe. You could potentially enter into an affordable repayment plan based on your own terms.

Alternatively (as discussed below), your lawyer may find there are grounds to have your case dismissed, such as the creditor not being able to show you owe the debt or failing to properly notify you of the case.  There may also be mandatory arbitration clauses in your credit card agreement that may or may not benefit you to highlight.

You could also explore the option of filing bankruptcy to avoid the possible consequences of having a judgment made against you.

Step 7: Consider Fighting The Lawsuit

Fighting the lawsuit is definitely one of your options. Just because someone sues does not mean that they will win, or even that they have a legal right to sue. Additionally, you may be able to initially fight the lawsuit to show you are serious about it to serve as leverage against the debt collector who may not want to deal with prolonged litigation.

An experienced lawyer can consider the possible arguments and defenses you can raise, which may include:

You Don’t Owe the Debt

Errors are rampant in the debt collection industry. Unpaid debt often exchanges hands multiple times before ultimately becoming a lawsuit. Debt collection agencies may sell or pass debt among them multiple times, increasing the likelihood of mistakes occurring sometime in the process. Some possibilities may include:

• The debt belongs to someone else
• The debt belongs to a person with a similar name
• The debt belongs to a person who previously resided at your address
• Someone committed identity theft against you

You Weren’t Properly Notified of the Lawsuit

There are strict rules regarding how you must be notified of a lawsuit against you. If the debt collector failed to follow proper procedures, the case could be dismissed. However, the company may simply be able to correct the mistake and refile the case. Still, this could be a useful strategy if the deadline to sue is near or to show you are aware of your rights.

The Statute of Limitations Ran Out

Each state has a set amount of time that a company can collect on a debt (most often 4 years in Texas). If the debt collection lawsuit deadline has expired, the debt may be considered zombie debt. In this case, you can raise limitation as a defense and ask the court to dismiss the case as “time-barred.” Having records of your last payment can help you establish this defense.

You File a Claim Against the Debt Collector

If you have grounds to make a claim against the debt collector, you may choose to fight the lawsuit and file a counter-claim. Debt collectors cannot make infeasible threats or call at certain times, among other prohibitions. While the debt collector’s actions may not invalidate the underlying debt if you really do owe it, you may be able to fight for damages that equal or exceed the amount of the debt.

If you lose your case after fighting the lawsuit, you may still have options. For example, you may still be able to file Chapter 7 bankruptcy and not be responsible for paying the judgment; or file a Chapter 13 bankruptcy, and only pay what you can afford to pay back to creditor over a 3-5 year period of time.

How Can I Settle My Credit Card Debt?

You may ultimately be able to settle your credit card debt before trial. Here are some tips on settling your credit card debt:

• Examine your budget – Look at your current budget and what you can realistically afford to apply to your debt each month.
• Make a lump-sum payment – You may be able to ease the financial burden by applying a large lump-sum payment at the beginning of the term. In some cases, the creditor may be willing to accept the payment in full satisfaction of the debt.
• Request a payment plan – You can request the creditor to put you on a payment plan so you can slowly pay off the debt one month at a time.

What If I Already Have a Judgment Against Me?

If you have received a judgment against you, don’t lose hope. There may still be options available. A skilled credit card debt attorney may still be able to resolve the judgment and work out a deal to avoid post-judgment collection methods.

We Can Help

Are you being sued for credit card debt in Texas? Or do you already have a judgment against you? Warren & Migliaccio, LLP Attorneys at Law serves the entire state of Texas, and we would love to hear about your case and determine how we can help.

For more information on our services, or to schedule a free consultation to discuss your case, please feel free to contact us . We look forward to hearing from you.