Dealing with creditors can be stressful under any circumstances, and even more so if your credit card company sues you for repayment. While facing a lawsuit may seem daunting, there are defenses you can use in court to help you win the court case. Keep reading to learn how credit card lawsuits work, some common defenses to help you win your case, and whether legal representation is the right choice for you.
Understanding Credit Card Lawsuits
When you open and use your credit card, you enter into a contractual agreement where you promise to repay what you borrow. And if you don’t, your credit card company has the right to sue you.
In most cases, your creditor won’t sue you until you become severely delinquent, which is anywhere from 90 to 180 days of missed credit card payments. It will probably try other collection methods first but may resort to a lawsuit if you owe a significant amount and don’t repay it.
When a creditor sues you, you’ll be served with a court summons informing you of the lawsuit. Responding can help you avoid a default judgment in favor of the creditor. You could have your wages or bank account garnished or a lien placed on your property to cover the repayment. You could also be on the hook for interest, collections costs, and attorney fees.
If you do show up, however, you’ll have the opportunity to argue your case, make a defense, and possibly even win the lawsuit.
Preparing Your Defense
If you receive a summons for a lawsuit from your credit card company, it’s important to take action right away to best prepare, whether it’s preparing for negotiations with your creditor or preparing for trial. Here are the first things you should do:
- Reviewing the Complaint: First things first, read the complaint carefully and compare it to your own personal documents. Make sure you understand what you owe and what the creditor is requesting from you.
- Gathering Relevant Documentation: Make sure to gather all of your documents relevant to the lawsuit, including credit card statements and previous communications with your creditor. These documents will help you understand whether the complaint is accurate.
- Understanding Your Rights: You have certain rights when you’re dealing with your creditors, including protection from unfair practices, harassment or abuse, and false or misleading representations, as well as the right to have your debt validated in writing.
Legal Grounds for Defense
If your credit card company sues you, there are some defenses you may be able to use in court. If these defenses apply to your situation, you could win the case.
Proving the Debt is Not Yours/Mistaken Identity
One of the easiest ways to have a debt lawsuit thrown out is if you can prove the debt isn’t yours. Maybe it was a case of mistaken identity where you have the same or a similar name as someone who actually does owe a debt. If you can prove the debt isn’t yours, you won’t be on the hook for the damages.
Fair Debt Collection Practices Act (FDCPA)
The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects consumers from unfair debt collection practices. The law places limits on how and when a creditor can contact you and the manner in which they can communicate with you. For example, it prohibits creditors from harassing or threatening you. If you can show that a creditor or debt collector violates the law, you could use it as not a defense but counterclaim in your lawsuit and even collect damages of your own.
Statute of Limitations
Most states have a statute of limitations (aka time limits) on credit card debt. Once the statute of limitations has passed, a creditor or collection agency can no longer take legal action to collect a debt. Most states’ statutes of limitations range from three to six years, though some are as long as 10 years. If this time period has passed in your state, your credit card company can no longer successfully sue you to collect the debt.
Arguing Procedural Errors – Improper Service of the Summons and Complaint
Each state has certain procedures that plaintiffs must follow when filing a lawsuit, including as it relates to the service of the summons and complaint. If the creditor serves the complaint in a way that doesn’t align with state law, you could use this as a defense in court.
Plaintiff’s Legal Standing
For a lawsuit to be successful, the plaintiff must show they have legal standing. In the case of credit card debt, the creditor would have to prove they have a relationship with you and have been wronged by your lack of payment. This defense could especially come into play if a debt collector has purchased your outstanding debt from your original creditor but doesn’t have the full account information. In that case, the debt collector may not be able to show legal standing.
Fraudulent Credit Card Charges
You aren’t required to repay credit card debt that’s the result of identity theft or a stolen credit card. Ideally, you would have notified your credit card company of the fraud long before it reached the point of a lawsuit. But if you haven’t or weren’t aware of the debt before, you can use this defense in a lawsuit. You may need a police report to support this defense in court.
Bankruptcy
A creditor can’t pursue legal action for a debt that was discharged in bankruptcy, whether it was Chapter 7 or Chapter 13. If your debt was discharged in bankruptcy, you can have the case dismissed and could even file for a counterclaim.
Responding to the Lawsuit
If your credit card company sues you, it’s important that you respond by the date stated on the summons. If you fail to respond, the judge can automatically rule in favor of the credit card company. And if you have a solid defense against the suit, that’s the last thing you want.
Here’s what you may want to do when responding to the suit:
Drafting an Answer
First, consider how you want to respond to the suit. You can respond in writing or simply by showing up in court (or both). Many creditors rely on defendants simply ignoring their summons. Just by responding, you’re improving your chances of winning the case.
Filing a Motion to Dismiss
It may be worth filing a motion to have the lawsuit dismissed. While the judge may ultimately rule in the credit card company’s favor, especially if you don’t have a good reason for dismissal, it’s certainly worth a try. Certain defenses, including statute of limitations or lack of legal standing, could lead to a fast dismissal of the case.
Considering Counterclaims
Consider what counterclaims or affirmative defenses you can make against the credit card company to help you win your case. As we mentioned, violations of the law can be a solid counterclaim.
Considering Alternatives – Settlement
Even if you’re already being sued, going to court isn’t necessarily your only option. Many debt collection suits are settled outside of the courtroom. Your creditor — whether it’s a credit card company or a debt collection agency — probably doesn’t want to go to court either. Settling the case outside of court can help you both save money, and you may end up settling for less than you actually owe.
Legal Assistance
At some point during the lawsuit process, it’s a good idea to consider whether you should hire legal help. A debt relief attorney is experienced in dealing with debt collection suits from both credit card companies and debt collectors. In addition to taking some of the work off your plate, an attorney can bring expertise and experience that can help you win your case (or at least decrease the amount you have to pay).
If you can’t afford an attorney, there may be other free and low-cost legal resources available to you. The Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) share information about dealing with lawsuits in case you want to go it alone. You may also find local legal services through a university, state law library, state or county bar association, or somewhere else.
Finally, it’s worth considering when it’s better to simply represent yourself. For example, if you only owe a small amount and it’s less than the cost of hiring an attorney, it may be easier to simply represent yourself in court or pay the debt off to avoid court.
After the Court Decision
If your case makes it to court, one of two things will happen: you’ll win the case, or you’ll lose. If you win the case, there likely won’t be anything additional required of you, other than paying your attorney fees, if you hired an attorney.
If you lose the case, the judge will issue a judgment that states how you’ll make good on your unpaid debt. You may be able to simply pay off the debt. In other cases, the court may resort to wage garnishment, property liens or bank account liens or another method of recouping the creditor’s loss.
The amount you’ll have to pay varies from case to case. It may be the full amount you owe or only a portion of it. You may also be on the hook for interest, late fees, or even the creditor’s legal fees.
Preventing Future Credit Card Lawsuits
If you’ve gone to court for a debt collection lawsuit, you probably know it’s not an experience you want to repeat. There are a few things you can do to help you avoid lawsuits in the future.
The simplest way to avoid legal action is to simply pay your credit card bills. However, if you’re facing financial hardship, that can be easier said than done. If you can’t pay the full amount, call your credit card company to see if you can negotiate a payment plan or hire a debt help attorney who is experienced resolving debts especially with credit card companies to get the best results. Chances are that your credit card company would rather negotiate with you than have to go to court.
Conclusion
Facing a credit card lawsuit can feel overwhelming, but there are defenses you can bring up to help you win your case. And even if those defenses don’t work, hiring an attorney and negotiating a settlement can help you make a deal to pay less than you actually owe.
If your creditor is suing you — or you’re worried they’re planning to — consider enlisting the help of a debt relief law firm like Tayne Law Group. We offer free phone consultations with an experienced attorney to find out if working together is right for you. Call us toll-free at (866) 890-7337 or fill out our short contact form to schedule your consultation. We never share or sell your information, and all conversations are confidential.
