Credit Card Suits FAQ

Credit card companies are increasingly using lawsuits to collect on delinquent credit card accounts. "The New York Times" reported in 2010 that most card companies are no longer satisfied with simply writing off defaulted credit card accounts as bad debts and settling for the resulting tax break. The change in strategy means it's very possible a credit card company could file a lawsuit against you if you default on your account.

Timeline

You can default on your credit card account by missing just one payment, but a lawsuit that soon isn't likely. Collection efforts increase as you fall behind by about 90 days, with the company closing your account after about six months. After that the account is assigned to an internal collections department or is sold or assigned to an outside agency. Collection efforts on the account will continue, and eventually the company or the debt collector may file a lawsuit against you.

Summons and Complaint

You'll be informed about the lawsuit through a legal document called a summons. A summons is a notification of a lawsuit. Another legal document, called a complaint, is attached to the summons. The complaint is the actual lawsuit and details the allegations being made by the card company. Delivery methods for summonses vary by the state, but in many states they are hand-delivered by a courier, who can contact you at your home, place of employment, or anywhere else. Depending on the laws in your state, the summons could require you to appear before a judge on a certain date or to file a written response to the lawsuit, after which the suit will be dismissed or a trial date will be set.

Winning In Court

Illinois Legal Aid reports that it is impossible to win a credit card lawsuit if you legally owe the debt and the credit card company can prove it by producing documents such as your original application and charge slips you have signed. "The New York Times" reports that many people make the mistake of failing to show up in court. When that happens, the judge automatically issues a so-called "default judgment" in favor of the credit card company or debt collector. The default judgment orders you to pay the full amount owed on the account, plus attorney fees and court costs.

Settlement

Many people facing credit card lawsuits choose to settle out of court. The SmartMoney website reports that defaulted credit card agreements can often be settled for 20 to 75 percent of the balance. You can contact the credit card company or debt collector directly to negotiate a settlement. Legal advice from an attorney could be helpful, but the attorney can't make the case go away if you legally owe the debt. The attorney can help you buy some time by filing various motions that could cause delays. That could provide an opportunity for you to save money for a settlement offer.