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How to Respond to a Suit for Credit Card Debt

According to a Consumer Financial Protection Bureau study, seventy million Americans are in debt collection status. It might be comforting to know that you are not the only one with past-due credit card debt.

Although it is not uncommon to have debt in collections, it can still lead to unpleasant consequences. You could be subject to a lawsuit if you default on credit card debt or are unable or unwilling to make an arrangement with your creditor company.

A lawsuit by a collection agency or creditor can be a frightening experience, especially if it’s not something you are familiar with. It doesn’t matter how overwhelmed or angry you may feel, it is best to ignore a summons from the courthouse. Learn how debt collection lawsuits work and what steps to take if a company sues for unpaid credit card debt.

What could lead a credit card company to sue?

If you fail to make your credit card payments on time, your credit card company may try to force you to pay. The card issuer might call, write or bring in a third-party debt collector to collect your credit card payments.

Your credit card company will almost certainly report your account as late as the credit rating agencies-–Equifax TransUnion and Experian. You could also be charged with additional collections if there is a collection agency involved. Your credit score could be ruined by late payments, charge-off status, and collection accounts.

It can be tempting to ignore calls or letters from your collection agency or credit card company. This can lead to escalation of the situation if there is no response.

You might begin to get calls from debt collection lawyers. These may offer you one last chance to settle or pay off your credit card debt. If you fail to reach an agreement that is satisfactory to the creditor, the attorney could file a lawsuit against your. According to the CFPB, around 15% of debt collectors are sued in civil court.

What is a Debt Collection Lawsuit?

Depending on where you live, the cost of debt collection lawsuits may vary. However, you will receive a summons once the attorney files a civil complaint in the state court. This will allow you to start the process of suing.

You should include important information regarding your lawsuit in the summons you get.

  • Who is suing (a.k.a. The plaintiff
  • All co-defendants that the plaintiff is suing along with you (like a joint holder of a card)
  • The amount that the plaintiff wants to collect (such as your balance, interest and legal expenses).
  • The hearing date
  • How to file a formal reply to the complaint

You cannot be sent to jail for failing to pay your credit card bill. If a debt collector threatens to send you to jail for not paying your credit card bill, it is likely violating the Fair Debt Collection Practices Act ( FDCPA).

Here are some steps to consider if you’re sued for credit card debt

Here are some options to consider when a debt collector or creditor sues you regarding unpaid credit card debt.

1. Verify that the debt is accurate

It is not enough to assume that a debt is correct just because it’s listed in a court lawsuit. Leslie H. Tayne is a debt relief attorney and founder of Tayne Law Group. She advises you to ask the collector to verify that your debt exists.

It is not uncommon for creditors or debt collectors to sue someone erroneously. Sometimes, incorrect details may be included in debt collection lawsuits (e.g. balance, late payment dates, etc.). They may also be fraudulent in certain cases. All parties are capable of making mistakes, including creditors, collection agencies, and debt collection lawyers.

You have the right to request verification of a debt under the FDCPA. This is part of the Consumer Credit Protection Act. To exercise this right, send a certified letter (return receipt required) to the person suing you.

This process can be handled by an attorney. If you are considering hiring legal counsel, it is worth at least setting up a consultation before you decide to take any action on your own.

2. Talk to an attorney

When someone sues, it is wise to get legal representation. An attorney may be able to help you in many ways if a debt collector or credit card company files a lawsuit against your.

  • The negotiation of a settlement
  • Answering a complaint
  • How to build a defence
  • Representation in court

Tayne says that if you stop making your monthly payments or have a large credit card balance, it is not uncommon to face a lawsuit. An attorney can help you determine whether the debt has been paid, the statute of limitations has expired, if a debt collector violates FDCPA, if your identity theft victim or if bankruptcy is filed.

You may have other options if you are unable to afford an attorney. You may be eligible for free or low-cost legal assistance through a clinic or legal aid program.

3. Decide how you’ll respond

It is important to carefully read all paperwork related to a lawsuit. The summons may be sent to you within 30 days. If you ignore a lawsuit or fail to appear in court, you will lose the case by default.

You don’t have to pretend that the lawsuit isn’t coming. Instead, you can review all options and pick the one that makes the most sense for you. These are some possible responses.

Resolve the Debt

Your attorney or you can try to resolve the defaulted credit card bill before the trial. This option might not be feasible depending on how much debt you have. If you have the financial resources to pay the debt, it might be possible to save a lot of money and avoid the hassle of trial.

Tayne suggests that you be careful about what you agree to and signs if you decide to negotiate a settlement. It is important not to lose any rights or agree with judgments. You don’t want to agree to a settlement agreement that you cannot afford.

Talk to Credit Counsellor

You might be able to settle your credit card debt in another way before the trial date. An certified credit counsellor may be able to help you to set up a Debt Management Plan (DMP), to repay your credit card debt through a series monthly payments.

A credit counselling agency will negotiate on your behalf with creditors when you sign up for the DMP. Many creditors will agree to waive late fees, lower interest rate and adjust your monthly payments. It is possible to add other unsecured loans to the DMP to make one, consolidated monthly payment to the credit counselling agency.

A debt collection lawsuit’s purpose is to collect defaulted debt. It can be done in lump sum or monthly payments. In certain situations, a creditor may be willing to accept a DMP in return for the dismissal of the lawsuit. It’s crucial to act quickly if you decide to pursue this option. Give the company that is suing you enough time to withdraw the lawsuit. Before the deadline for your summons expires, it’s important to accept your DMP proposal in written form.

Visit Court

You may be able to file a lawsuit against a debt collector in court. If you don’t owe any debt, the debt is barred (meaning that the statute of limitations has expired). However, if your defence is strong, it may be possible to win the case before a judge.

The right to represent yourself at court is yours. You will most likely be in a disadvantage if you don’t have any legal experience. You can schedule a consultation if you are unsure whether to hire an attorney. This will allow you to get more information and professional advice about your case.

Don’t wait to speak with an experienced attorney or organise your defence. Your lawyer or you will have to respond to the lawsuit in writing. The court will also impose deadlines which you will need to adhere to.

File Bankruptcy

When it comes to debt-related issues, bankruptcy is usually the last resort. If a creditor or debt collector sues you for credit card debt that you have not paid, bankruptcy protection may be an option.

A bankruptcy can have a negative impact on your credit score. It may make it more difficult to borrow money in the future, at least until you rebuild credit. However, bankruptcy can protect you from wage garnishment and tax refund garnishment.


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