If you owe a balance on credit card debt and do not make your minimum monthly payment on time, your creditor will likely contact you by telephone or letter in an attempt to resolve the past due balance. Once your account becomes 30 days past-due, it may also report you to the credit bureaus, which can affect your ability to obtain future credit. However, if you do not bring your account current, the credit card company may choose to sue you for the balance.
Lawsuit Process
Because suing a debtor is expensive, credit card companies typically use extensive collection efforts to compel you to pay before opting for legal action. However, if you avoid your creditor or cannot negotiate a repayment plan, the creditor may hire an attorney to file a civil suit, usually in your county's municipal or magistrate court. The creditor or attorney will supply copies of your account information to show that you owe the debt. The court will then serve you with notice of the lawsuit by certified mail or personal service depending on your state's laws.
Opportunity for Response
After you receive notice of the lawsuit, you will have an opportunity to respond in writing or at a court hearing. The length of time for response varies by state -- most states allow about 30 days. If you can demonstrate that you have already paid the credit card debt, or that the creditor or attorney violated procedural law when filing the lawsuit, the court may dismiss the suit.
Judgment
If you do not respond to the credit card lawsuit, or cannot provide an adequate defense during the time frame allowed, the court will typically enter a judgment in favor of the creditor. A judgment legally affirms that you have a debt obligation to the credit card company. It becomes public record, which means that future potential lenders, landlords and employers can access this information. Judgments also appear on your credit reports for seven years after you repay the debt, or seven years after your state's statute of limitations.
Consequences
A valid judgment for credit card debt limits your options to resolve the debt -- most creditors will not accept a partial settlement after obtaining a legal judgment. In most states, the credit card company or attorney may apply to the court for authorization to garnish your bank accounts or wages -- this allows the creditor to take part of your bank account balances and earnings to apply toward repayment. The court will also place a lien on real estate property you own, preventing you from selling the property until you pay off the judgment.
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