What to Do if You're Being Sued by a Credit Card Company in Small Claims Court

If you have credit card bills and are late making the payments, the credit card companies will begin collection actions. The companies have been known to call at various times during the day and night, asking you to pay the past due payments. Eventually, the collectors may step up their efforts, and you could end up in small claims court being sued for the amount of the debt.

Determine if You are Really Being Sued

It is against the law for a creditor to threaten legal action when it does not intend to sue, but it still happens. Many collectors send letters that may look like a court summons, but really are nothing more than collection letters. A court summons will have the name and address of the court that you are supposed to appear in, and also the date that you are supposed to appear. Call the court to verify that you have a real summons and court date. Also, most courts require a sheriff or other officer to hand you the summons in person.

Respond

You must file a response to the lawsuit in writing at the court where the creditor has filed the suit. If you do not believe that you owe the bill, or the balance is wrong, you need to include that information in your response. You may also file a general response saying that you dispute the lawsuit. Filing a response preserves your rights to defend the lawsuit and helps to protect you from a default judgement against you, where the creditor wins automatically.

Prepare and Negotiate

If you do not owe the debt, be prepared to show proof as to why not, even though it is the creditor's job to prove you owe the debt. The stronger you can make your case, the better. If you owe the debt legitimately, it is a good time to negotiate with the creditor. It may be willing to start accepting payments again, or the creditor might settle the debt in full for a percentage of the original amount. Settlements generally must be paid in cash, so do your best to put cash together and take care of the debt before the court hearing. Always get any settlement agreements in writing.

Consult a Bankruptcy Attorney

If you are not able to settle the debt, and it is legitimately your debt, the creditor will probably win the lawsuit and receive a judgment against you. After that, depending on the laws of your state, the court may issue an order allowing the collector to garnish your wages, possibly taking up to 25 percent of your salary to satisfy the judgment. This could leave you unable to pay your living expenses. At this point, bankruptcy may be an option for you to stop the collector's lawsuit and any other collections actions against you.