Getting Sued by a Credit Card Company

Ashwini Kulkarni Sule Jan 10, 2019
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Here, we tell you what to do when a credit card company threatens to sue you, or worse, initiates a lawsuit.
Most of us live from paycheck to paycheck! All our unbudgeted expenses are taken care of by a credit card. When you apply for a credit card, you sign a contract agreeing to pay the amount utilized on the credit card along with the accrued interest on the balance.
When you fail to pay this amount, the credit card company has the right to collect the outstanding debt money from you using fair and legal practices. Filing a lawsuit against you is the last resort taken by the company, when all attempts of debt settlement fail. Though credit card companies suing their debtors is not unheard of, it is definitely unusual.
So in case you are dreading a legal notice from your credit card company, you can sit back and relax for the time being, as it seems unlikely that you will actually get sued. Nonetheless, you should know the steps to be taken in case you are sued by the company.

Why Your Credit Card Company Wouldn't Consider Suing You

That's a million-dollar question. Every year thousands of people end up in credit card debt. Yet, we only hear a handful of cases finally ending up in the court of law. Why does this happen? As discussed, suing you is the last thing on your creditor's mind. Your credit card company will offer several consolidation options for you to choose from.
Now, if you can live the torture of enduring the harassing calls and threats of the collection agents, and still refuse to pay the impending debt, you will most likely receive a notice from the credit card company regarding their intention of filing a lawsuit against you. Receiving the notice does not mean you will be tried in court and locked up in prison.
There are various reasons why your credit card company wouldn't consider suing you. First, the cost of filing a lawsuit, hiring an attorney, attending trials, etc., is too much for creditors. Your impending debt is likely to be far less than this cost. Only if the debt is higher than the cost of lawsuit, can the company consider actually filing a lawsuit.
You may get sued by the company if it happens to be a local company. Local credit card companies can substantially cut on the cost of hiring an attorney from your county as they have their own panel of attorneys. However, this still is a remote possibility, because the company wouldn't consider wasting it's resources unless absolutely necessary.
Most companies only use this as a ploy to scare you so that you will agree to debt repayment. The most they can do is, report negative information to the credit bureaus, so as to make future borrowing difficult for you.

What to Do If You are Getting Sued by Credit Card Company

In rarest of rare cases, you might actually receive a summons against you. In that case, it is best to seek legal advice as early as possible. Evading the court's order can land you in serious trouble. If you do not abide the court's order or miss a date you may get 'writ of attachment' against you.
Responding to summons is wise to avoid further hassles. Given here is a 3 step guide to respond to summons.
  • Your first step on receiving summons should be filing 'Motion for Extension of Time' which grants 30 days or more to prepare for court case. In this time, the case is put on hold and you can use this to study the allegation and prepare the response.
  • Look for any procedural failures on part of the creditors. If you find that creditors have violated any law or have not followed correct court procedure, you can file for a 'Motion of Dismiss'. In this case, you need not have to prepare your response.
You should particularly check if the creditor's have adhered to notice requirements or not. Failure to attach an original contract to the complaint on the creditors part often warrants Motion of Dismiss.
  • If you cannot possibly file for a Motion of Dismiss, you should begin preparing for your case. You should thoroughly research Federal Laws, especially Fair Credit Reporting Act (FCRA). This act gives the detailed procedure for reporting negative information of the debtor's account to the credit bureaus.
Since this is a very tedious procedure, more often than not, there will be always a few violations on the creditor's part. Each violation can cost them USD 1,000. Hence, it is a must that you find as many violations as possible.
Usually, these three steps should be enough to give you a strong foothold while defending your case. If your Motion of Dismiss has been approved by the judge, you have nothing to worry about. Similarly, if you find considerable violations of FCRA, your credit card company will choose to play it safe by withdrawing the lawsuit against you.
Paying USD 1,000 for each law violated is never going to be profitable for them. Hence, they'll probably agree to the debt settlement you offer. You may request the court to intervene and come up with a plan agreeable to both disputing parties. Pay the portion of debt as ordered by court and finish the debt problem.
Defending your case will be painful for you as well. It may  turn out to be expensive if you are hire an attorney to defend you. If you lose the case, the court may order the company for garnishment of bank account or wages and your credit score will be affected forever. Learn to manage your finances properly. Never borrow what you can't pay back.