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Falling behind on your credit card payments can be stressful. This is especially true if you can’t see a point in the near future when you will be able to catch up on payments. With that kind of debt hanging over your head, it can be hard to see a way forward. You may be living in fear of repossession, declining credit scores, and even potential lawsuits. If you are fearful that a credit card company might sue, then keep reading to learn more. 

In short, yes, a credit card company can, in fact, sue you for missed payments. While this is true, it doesn’t mean that the credit card company will come after you with the full force of the law after one missed payment. However, the more payments you miss, the more likely you are to face legal backlash. Let’s take a closer look at when a credit card company lawsuit may be filed against you and what your options are when it happens. 

Why Would a Credit Card Company Sue You?

While credit card company lawsuit horror stories may make the companies eager to sue at the drop of the hat, the truth is, that lawsuits are typically the last resort in a majority of cases. Lawsuits are not only expensive, but they are also time and labor-intensive. Because of this, there are typically many steps in between your first missed payment and when your credit card company finally files a lawsuit.

After your first missed payment, you will likely begin receiving communication from the credit card company asking for you to make up your missed payment. Collection efforts typically begin after you have missed your payment through multiple cycles. This can include calls, emails, and even in-person visits. 

If collection efforts are ignored, or you ask them to stop contacting you, there is a higher probability that the next step a credit card company will take is a lawsuit. The goal of the lawsuit is simple: the credit card company wants to force you to repay them — even just a little bit. Typically, they are seeking a wage garnishment authorized by the court that runs until the debt is repaid. This can help the company recoup at least some of its cost (considering they have to spend money on legal fees throughout the lawsuit). 

What To Do When A Credit Card Company Sues You?

So, what should you do if you receive notice of legal action? There are a few ways you can respond. 

Ask For Documentation

This isn’t as effective as it might be if a debt collection agency was suing you, but it could be helpful. Creditors are required to show proof that the debt they are suing you for is yours and that you have regularly missed payments on the account. If they are unable to do this, for whatever reason, then the court will typically not be able to rule in their favor. 

Consider the Statute of Limitations

Believe it or not, there is a statute of limitations on your delinquent debt. If you have missed payments for years, there is a possibility that the creditor has missed their window and can no longer sue you for that debt. The length of time in between payments is measured from the date of your last payment. This means, if you are nearing the end of your statute of limitations, there is a chance your creditor may ask you to make a “good faith” payment. If the lawsuit process has already begun, try to withhold any good faith payments to make sure that the timeline is not reset, which would result in your being responsible for the remaining payment, as well as the accrued interest. 

File a Countersuit

Creditors have relatively strict rules they must abide by when attempting to collect on a debt. These are found in the Fair Debt Collection Practice Act. If any of these rules were broken or even bent, it may be worth filing a countersuit. Doing so may encourage your creditor to drop their lawsuit to avoid wasted time or even prosecution. 

Do Nothing

While this is not necessarily a recommended course of action, there is a place where it works. If you ignore the lawsuit, you will undoubtedly go to court. If you do not show up to court, you will likely have a default judgment against you. This means your wage will likely be garnished. You can also ignore the lawsuit, but show up to court to defend yourself. Ultimately, this option may work best for you if you know you will be forced to pay back the debt and do not want to waste time or money on court fees, then it may make sense to not do anything. 

Bankruptcy

Finally, you can also file for bankruptcy in response to a lawsuit. Filing for bankruptcy can automatically stop any pending judgments against you. This means that you can stop your creditors from getting a wage garnishment from you. 

Things To Consider

Here are just a few things to keep in mind when deciding how you are going to respond to the lawsuit.

  1. Do not admit fault. Admitting fault or that you are aware of the debt that you owe can be evidence in a court case. Assume that your creditors are recording every conversation they have with you. NEVER admit that you are aware of the debt.
  2. Act fast. If you are going to do something, do it fast. Though you should have a set amount of time between when you are served and when the court date is set, things can move slowly. Because of this, you want to make sure you can get everything you need together before the court date. 
  3. Make notes of every interaction you have with your creditors. Each time you interact 

Debt Relief Alternatives

If you are worried that your creditors may be filing a lawsuit soon, there are some options you have. Here are just a few to consider:

Conclusion

If you have any questions about potential debt lawsuits or debt-relief options, feel free to give us a call! At Ascend, we love giving unbiased advice that is specific to your unique circumstance. We’d love to talk, so reach out!

Post Author: LincolnE

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