The options available to a credit card debtor who has been sued for defaulting on his payment obligations are rather limited. However, there are affirmative steps each debtor/defendant should take to protect his interests and standing in the legal proceedings. By responding appropriately and timely, a debtor will be able to raise any legitimate defenses, and in cases where there is a dispute as to the balance owed, will be able to ensure that any sums due are accurately recorded by the court.
Response To Suit
Once suit has been filed, the debtor should answer the complaint of the credit card company. Responding to the complaint by filing an answer will prevent the card company from obtaining a default judgment. Though filing an answer will not prevent the credit card company from ultimately securing a judgment, it will buy some time for the debtor.
Significance
Since most credit card debtors who are sued are liable for the default balance owed, it is important to note that once a card company obtains a judgment, it can begin post-judgment collection procedures authorized by law against the debtor. These include wage garnishment, attachment and obtaining a lien against the debtor's real property. In addition, the judgment against the debtor will appear on his credit report.
Amount of Damages
In most jurisdictions, before a card company will be awarded a judgment, it must attach an affidavit of damages that documents that the debtor is delinquent in the amount stated. If the debtor disputes the amount of the default balance owed, he should gather his payment records and present them to the court.
Voluntary Dismissal
If a debtor has been recalcitrant in making payments on the credit card balance yet has the financial means to pay off the debt, he should contact the attorney for the card company and offer to pay the balance owed in exchange for a dismissal of the suit. Since the card company is principally interested in recovering the delinquent balance owed, it should be amenable to such an offer. Dismissing the action at the early stages of the suit, in exchange for paying off the default balance owed, will preclude the card company from obtaining a judgment against the debtor.
Bankruptcy
A debtor has the option of seeking bankruptcy protection from his creditors. Since the statutory bankruptcy notification to creditors has the effect of staying all collection activities including legal proceedings against a debtor, the cardholder should file for bankruptcy as soon as he is served with a summons and complaint from the credit card company. Since the claims of a judgment creditor, in most cases, have priority over those of other unsecured creditors in bankruptcy proceedings, the debtor should file before the card company obtains a judgment against him.
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