Being sued by a credit card company, 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 time frames, or risk a default judgment entered against them. This article discusses how a lawsuit works, typical procedures for responding to a lawsuit, and the consequences of a lawsuit.
The process of being sued
If you fall behind on your credit card payments, your lender can sue you. The credit card company may accept payments or a lump sum, but in most circumstances it is not required to agree to anything less than the agreed terms. In many cases, this can mean the entire balance on your credit card.
To start a lawsuit, the credit card company or debt collector can file a “Complaint” in small claims or other trial court. If the case goes to small claims court, neither you nor the company will have a lawyer in court. However, the company may have a lawyer assist them outside of court. If the case is not in small claims court, the business will likely be represented by an attorney.
After you file the lawsuit, you will be given a “Summons” to appear in court. You can be seen in person at your home or at work. A family member or co-worker can receive a “substituted service” on your behalf. You may also be notified by mail or by publication.
Responding to the Demand
As stated above, if you do not properly respond to the complaint within the allotted time, a judgment may be entered against you. You should read the summons and complaint carefully. If you choose to oppose the lawsuit, you must file an “appearance” within the time allowed on the summons. You must follow the rules of the court and say the right things, or a judgment may be entered against you.
If you object to the lawsuit, you must have a legal reason to do so. It is usually not enough to appear in court to explain why you missed your credit card payments or to request that the judge order the company to accept the payments. Examples of legal defenses are that the company sued the wrong person or that someone other than you opened the account without your knowledge.
In some cases, the lawsuit has been filed outside the legal time frame for filing such cases. This is known as the “statute of limitations.” Different statutes of limitations may apply depending on which state you live in and which 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 an attorney who defends people under credit card laws to determine if this defense applies.
When a judgment is passed
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 garnishment of your wages or bank accounts and, in some cases, seizure of your assets. The full scope of a judgment creditor’s rights can vary depending on the state in which you live.
If a creditor garnishes your wages or bank accounts, you may have the right to object. Such objections are called “exceptions.” The amount of applicable exceptions may vary depending on the state in which you live. You must file the appropriate forms with the court within the time allowed.
Discharge of debts through bankruptcy
If you’re burdened with inescapable debt, including credit cards, other loans, and judgments, you may be able to avoid paying it off by filing bankruptcy. Not all debts are dischargeable, so you should speak with a bankruptcy attorney to find out if you qualify for bankruptcy and if you can discharge the debts and judgments against you.
