Illinois Legal Aid offers blunt advice for defending a credit card lawsuit: settle out of court by agreeing to a payment plan. The nonprofit organization staffed by attorneys reports that people rarely win credit card lawsuits. There are exceptions, including one that is very effective. State statute of limitation laws are arguably the best defense in a credit card lawsuit -- if your case is eligible for the protection.
Statute of Limitations
Statutes of limitations are state laws and they vary by the state. They determine how much time creditors have to use the courts to collect on defaulted credit accounts. Generally, the average on credit card debt is about six years after the last activity on the card, such as a payment or the date the company charged off the account and sent it to a collections agency. Accounts beyond the statute of limitations are too old for consideration by the court -- a situation known as "time-barred" for collection.
Case Study
"The New York Times" reported in 2010 how a man successfully defended himself in a credit card case by sending a note to the judge that the debt was beyond his state's statute of limitations. The judge dismissed the case. Information about statutes of limitation is available from the local office of your state attorney general. People seeking statute of limitations as a defense must get correct information about the law and should consult an attorney or a local legal aid office. Contact information for a local legal aid agency or similar organization generally is available by calling your public library.
Few Options
There are few other reasonable defenses against a credit card lawsuit. Illinois Legal Aid reports that explaining to the judge that you could not pay because of job loss, divorce or illness will not lead to a successful defense. The judge looks for a strong defense backed by law, such as identify theft. Financial hardships are understandable but do not relieve you of responsibility.
Luck
Luck sometimes plays a role when there is no statute of limitation defense available. Debt collection agencies working on commission generally file credit card lawsuits. Some are top-notch at what they do, while others are not. There is always a chance that the attorney will fail to show for the court hearing or will arrive unprepared and without the full documentation needed to prove the case. The judge will dismiss the case if that happens. However, stakes in a credit card lawsuit are high. Showing up hoping for a miracle is usually not a good strategy.
Judgments
The judge can hand down a monetary judgment if he agrees with the attorney for the debt collector that the credit card debt is valid and that you stopped paying. A judgment requires you to pay the full amount due plus attorney's fees and court costs. If you refuse to pay, the debt collector can request garnishment of your bank account or wages.
Settlement
People without suitable defenses should settle out of court. The lawsuit and threat of a judgment gives the debt collector the upper hand in settlement negotiations, however. The debt collector is likely to seek full payment and may consider installments. That's usually preferable to a judgment and possible garnishment.
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