Being sued by a credit card company, a debt collection agency, or other creditor can be a stressful and frightening experience. The most important thing for a person who has been sued is not to ignore the lawsuit. A defendant in a lawsuit must follow the proper procedures within the proper deadlines, or they risk a default judgment being entered against them. This article discusses how a lawsuit works, typical procedures for responding to a lawsuit, and the consequences of the lawsuit.
The Process of Being Sued
If you fall behind on your credit card payments, your lender may sue you. The credit card company may accept payments or a lump sum settlement, but under most circumstances is not required to accept anything less than the agreed upon terms. In many cases, this can mean the entire balance on your credit card.
To initiate the lawsuit, the credit card company or debt collector can file a “Complaint” in small claims court, or other trial court. If the case is filed in small claims court, neither you nor the company will have a lawyer in court. However, the company may have a lawyer assisting them outside of court. If the case is not in small claims court, the company will likely be represented by a lawyer.
After the complaint is filed, you will be served with a “Summons” to appear in court. You can be served in person at home or at work. A family member or co-worker may receive “substituted service” on your behalf. You may also be served by mail or by publication.
Responding to the Lawsuit
As noted above, if you do not respond to the lawsuit in the proper form within the allotted deadline, a judgment may be entered against you. You should read the summons and complaint closely. If you choose to oppose the lawsuit, you must file an “appearance” within the time allowed in the summons. It must comply with the Court’s rules and say the correct things, or a judgment may be entered against you.
If you oppose the lawsuit, you must have a legal reason for doing so. It is typically insufficient to appear in Court to explain why you defaulted on your credit card payments, or to request that the Judge require the company to accept payments. Examples of legal defenses are that the company has sued the wrong person, or that the account was opened by someone other than you without your knowledge.
In some cases, the lawsuit has been filed outside the legal time limit to file such cases. This is known as the “statute of limitations.” Different statutes of limitations may apply depending on what state you live in, and what state the credit card company is located in. The applicable statute of limitations may vary depending on the specific facts of your case, and you should contact a lawyer that defends people from credit card lawsuits to determine of this defense applies.
When a Judgment is Entered
If you lose your case, or if a default judgment is entered against you, the result is the same. The company will get a judgment against you. That entitles them to take certain steps to enforce the judgment, including garnishing your wages or bank accounts, and in some cases, seizing your assets. The full extent of a judgment creditor’s rights may vary depending on what state you live in.
If a creditor garnishes your wages or bank accounts, you may have the right to object. Such objections are referred to as “exceptions.” The amount of the applicable exceptions may vary depending on what state you live in. You must file the proper forms with the court within the proper time allowed.
Discharging Debts through Bankruptcy
If you are overwhelmed by inescapable debt, including credit cards, other loans, and judgments, it is likely you can avoid paying them by filing for bankruptcy. Not all debts are dischargeable, so you should talk to a bankruptcy attorney to find out if you qualify for bankruptcy, and if you can discharge the debts and judgments against you.
