If you miss a credit card payment, the credit card company will begin making telephone calls and sending letters to give you an opportunity to bring your account current. However, if you continue to miss payments and ignore your creditor's collection attempts, the creditor may file a lawsuit against you. You will then receive a summons notifying you of the lawsuit.
Opportunity to Respond
Once you receive the summons, you will have the opportunity to respond to the lawsuit in writing. The time available for response varies according to state laws; however, most states allow about 30 days. You may issue a written response contesting the validity of the lawsuit if you believe the creditor improperly filed the suit, or if you can prove that you have already paid the debt. You will send a copy of the response to the court and the attorney representing the creditor, typically via certified mail.
Judgment
After the expiration of the response period, the court will use any information provided in your response to determine whether to dismiss the lawsuit. If you do not respond to the summons, the court will issue a default judgment in favor of the plaintiff. It may decide to hold a hearing if the judge believes that you have raised a valid defense to the lawsuit, or may simply dismiss the suit. If the judge believes your defense is not valid, the court may either allow a hearing so you can provide additional evidence or award the judgment to the creditor.
Judgment Lien
After the court awards a money judgment against you, the creditor can legally take aggressive action to compel you to pay the debt, which includes court costs, interest and legal fees. It will place a lien on your home or other real estate property, which prevents you from selling the property until you satisfy the judgment debt. If you have enough equity in your home to cover the judgment, the creditor may apply to the court to force the sale of your home to pay the debt. Any proceeds from the sale above the judgment amount will be paid to you.
Garnishment
A creditor that holds a valid judgment against you may also use garnishment as a collection strategy. Depending on your state's laws, it may either order your employer to send a portion of your wages to the court until the judgment is paid, or order your bank to freeze your account and forward the funds to the court. Federal law limits wage garnishment to 25 percent of your post-tax income, or weekly earnings above minimum wage for a 30-hour work week, whichever is less.
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