Credit card companies can continue a lawsuit against you after a default judgment is denied or vacated. After the default judgment is vacated a new hearing will be scheduled before a judge; the card company is not required to file suit again. The default judgment was automatically awarded when you failed to appear in court to defend yourself. A judgment is a legal decision requiring you to pay money.
Vacating the Judgment
Default judgments can be rescinded by filling out a "Notice of Motion to Vacate Judgment" form and explaining why you failed to appear in court. The judge who issued the default judgment will consider your request and either vacate the judgment or allow it to stand. Default judgments are sometimes vacated because the person missing the court hearing was sick, had transportation problems or was not properly served a legal notice about the hearing. The motion to vacate form is available from court clerks and must be submitted to court officials.
New Hearing
The new hearing restarts the process with you appearing before the judge along with the attorney for the credit card company. You can also hire your own legal counsel. However, there is little a lawyer can do if you owe the credit card company and have refused to pay. There are few successful defenses for credit card debt lawsuits. You could argue that you were the victim of identity theft and that you never opened the account. However, the judge would ask for proof of the fraud, such as police reports. Explaining to the judge that you simply couldn't afford to pay the bill is not considered a suitable defense.
Settlement
Court should be avoided if you do not have a successful defense. Appearing before the judge will simply lead to another judgment if the card company proves its case. If possible avoid the court hearing by reaching a settlement with the card company. SmartMoney reports that credit card debt can be settled for 20 to 70 percent of the balance, possibly payable in installments. Have your attorney contact the attorney filing suit to strike a deal. Or contact the attorney yourself.
Credit Report
Once you finish paying the settlement your credit report will be updated to show that the account was "settled for less than the full amount owed." That will hurt your credit score, but is less damaging to your credit than a judgment. Avoiding a judgment also ends the possibility of bank and wage garnishment. Garnishment allows the card company to receive a percentage of your check each payday and also to freely withdraw money from your bank accounts until the judgment is paid.
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