How to Settle an Old Credit Card Debt You Are Being Sued For

Whether it's a credit card company or collection agency that files a lawsuit against you for unpaid debts, if they win the case you'll end up with a civil judgment on your record. Not only does a judgment damage your credit rating, but it gives the creditor additional collection rights. Depending on your state of residence, this can include wage garnishment, bank levies and even real estate liens. If you're being sued for an old credit card debt, you can contact your creditor and attempt to settle the account rather than attend a court hearing.

Instructions

1

Make copies of documents you have that demonstrate a financial hardship, such as past tax returns, pay stubs or proof of unemployment.

2

Write a letter to your creditor's attorney indicating that you are interested in settling the debt rather than going to court. Include copies of any documents that prove financial hardship. If your income is comprised solely of Social Security payments, a retirement pension, unemployment or public assistance benefits, mention this in your letter. These forms of income are exempt from garnishment by private creditors. Exempt income or financial hardship can leave a creditor unable to collect the debt even if he follows through with the lawsuit, leaving the attorney more likely to negotiate a settlement with you.

3

Mail the letter using certified or registered mail and ask for a return receipt. This ensures that the attorney will not only receive your letter, but that you will receive documentation proving it.

4

Call the creditor's attorney if she has not contacted you within one week of receiving your letter and ask how much you need to pay to settle the debt. Negotiate an acceptable settlement amount.

5

Request that the attorney provide you with a written copy of the settlement offer and a statement acknowledging that the creditor agrees to drop the lawsuit in exchange for payment.

6

Submit your payment. Request a receipt from the creditor illustrating that your account was paid and currently reflects a zero balance. This protects you in the event that the creditor sells the debt to a collection agency.