How To Beat a Credit Card Lawsuit in Court

What Are Your Chances of Winning a Credit Card Lawsuit Against You?

Better than you might think! But you have to fight back.

Most credit card lawsuits are brought by debt buyers who don't expect you to show up to court. After all, when you don’t show up, they win by default — which happens in more than 70% of cases according to a Pew Charitable Trust report. Because facing a no-show is easy, creditors and debt collectors may come to court unprepared and without the documents needed to prove their case. In other words, you may have a better chance of beating a credit card lawsuit than you think.

What To Do if You’re Sued by a Credit Card Company

Start by asking yourself a few questions:

• Is the debt yours? Verify it.

• Is the debt old? Check the statute of limitations for debt collection in your state.

• Did the debt collector break the law when trying to collect the debt? Know and protect your rights.

• If you’ve filed for bankruptcy, did your case include this debt? 

Even if you think that you legitimately owe the creditor money, you should still make credit card companies meet their “burden of proof” by proving to the judge that you owe the exact dollar amount they’re claiming. This burden of proof can be a tough requirement to meet. Creditors are often unprepared to prove this in court. This is especially true for third-party debt collectors who purchased the debt from another party.. 

Verify That the Debt Is Yours

If you’ve been sued, the first question to ask yourself is whether the debt is actually yours. Sometimes creditors or debt collectors target the wrong account holder. If you’ve been making good faith repayment efforts, the creditor filing suit may be going after the wrong person.

When you’re sued, you’ll be served with two legal documents:

• A court summons ordering you to appear in court, giving the time, date, and location

• A legal complaint describing the basis of the claim and stating how much you owe

Taking into account a high interest rate and late penalties, the amount should still be one you recognize. The suing party (plaintiff) should be the credit card company, a financial institution where you have a bank account, or a company that has purchased outstanding debt that originally belonged to one of these entities. The party being sued (defendant) should be you or a co-signer of the account. 

What If You Don’t Recognize the Debt or Debt Holder?

Almost all debt collectors will make some attempt to contact you about the debt before filing a lawsuit. The federal Fair Debt Collection Practices Act (FDCPA) and related regulations requires debt collectors to send you a validation notice either before they contact you about a debt or within five days after the first contact. This validation notice should include basic information about the debt. 

If you don’t recognize this debt, you have the right to request the original creditor’s name and/or other information about the debt by writing a debt verification letter. If you are served with a summons to appear in court but you have no idea who the plaintiff is, the situation could be a case of:

• Identity theft or credit card fraud: You didn’t make or consent to the purchases.

• Mistaken identity: Someone opened a credit card account or did business with a company you don’t recognize.

• Clerical error: The credit card company made a mistake in its recordkeeping.

All of these cases involve mistakes that are not your fault. Learn how to protect yourself against identity theft and report credit card fraud. Also remember that debt buyers and even credit card companies get names and addresses wrong, too. Get a free credit report to make sure any claimed debt is yours and has not been reported twice.

If the credit card company sold a list of accounts to another agency, the debt buyer may not have the legal right to sue you. You may have already paid or settled the debt with the original creditor or there may have been some error in the purchase procedure. Both are solid legal defenses. We talk more about mounting a defense below.

Check the Statute of Limitations

The next question to ask yourself is whether this is an old debt. If the debt is old enough to be considered "time-barred,” it’s too late to sue you. 

That’s because of statutes of limitations on debt collection. These state laws limit the amount of time creditors have to bring a case in civil court for an outstanding debt. 

Statutes of limitations generally range between 2–6 years. They vary both by state law and the type of debt you have. You’ll want to check your state’s laws to see what statute of limitations applies. 

Be aware, though, that the court won’t automatically dismiss the case just because the statute of limitations has expired. It’s your responsibility to respond to the lawsuit and tell the court that the debt is time-barred. This will usually result in the judge dismissing the case.

Make Sure the Debt Collector Hasn’t Broken the Law

Now, ask yourself if the debt collector harassed you while trying to collect this debt. 

If the original credit card company charged off your debt and it was sold to a third-party debt collector, they must follow strict rules.

The Fair Debt Collection Practices Act (FDCPA) forbids third-party debt collectorsfrom engaging in fraudulent and deceptive behavior. They also can’t harass you by:

• Making early-morning or late-night calls

• Telling family, friends, or others about your debt

• Phoning after you’ve told them they can’t call at work

• Trying to speak to you once you’ve hired an attorney

• Contacting you after you’ve written a letter telling them not to

If any of these have happened to you, you may have grounds to file an FDCPA complaint, and you could be awarded up to $1,000 against the debt collector. Learn more about how the FDCPA protects consumers and your rights against harassing debt collectors. You can also learn how to deal with debt collectors and get them to stop calling you.

Take Full Advantage of Bankruptcy Protections

There are two main types of consumer bankruptcy: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy tends to work best for people who have a lot of unsecured debt like credit card debt, medical bills, personal loans, and payday loans. Chapter 13 bankruptcy works best for people who don’t meet the income requirements for Chapter 7 or who are behind on paying for secured debts such as a mortgage or car note.

If you filed bankruptcy after you incurred the debt in question, it is illegal for a debt collector to try to collect the debt once you receive your bankruptcy discharge. If this happens, you can use it as a defense and ask the court to dismiss the case. You may even have a claim against the credit card company or debt buyer for having violated either the automatic stay or bankruptcy discharge injunction.

If you haven’t filed bankruptcy but you’ve been considering it, keep in mind that once you file, you get automatic protection from all collection activities, including lawsuits, thanks to the automatic stay. 

If you’re interested in filing Chapter 7 bankruptcy yourself, see if you’re eligible to use Upsolve’s free web tool. Upsolve can also help you find a local bankruptcy attorney who can tell you whether bankruptcy is a good option for your situation during a free consultation.

How To Win a Credit Card Lawsuit

After you've considered the facts, find out what type of response is required. The summons you received should include some information about how to respond to the complaint. If you’re unsure, you can contact the court clerk in the court where the complaint was filed. The clerk can’t give you legal advice, but should be able to provide the correct forms and other information.. 

In some states, checking a box on the complaint document admitting or denying the claim may work for an answer. Or it may be enough for you to show up to court on the date and time listed in the summons. 

In other courts, you may need to file a written response to the complaint. You may be able to do this on your own or you may want to seek legal help. Many law firms offer free consultations, but you’ll have to pay for legal services like negotiating on your behalf with creditors or collection agencies or appearing in court. 

Getting legal advice and having someone to deal with harassing calls may be worth your peace of mind. Plus, if you have a good defense, the plaintiff may be ordered to pay your attorney fees and other legal fees. We’ll cover some possible defenses below.

If you can't afford a lawyer, you may be able to get free legal help from a local legal aid organization, the American Bar Association (ABA), or the National Association of Consumer Advocates (NACA). 

How To Answer the Complaint

Along with the summons and complaint should come instructions concerning what you need to do next. Usually, you’ll have about 20–30 days to submit an answer. If there’s an answer sheet provided or in your written pleading, you’ll want to:

• Admit or deny each claim 

• Raise any defenses

• Counter with your own claims against the company, if any

Sign the bottom of the page and keep a copy of the complaint and your answer for your records. If your answer includes a counterclaim against the plaintiff for FDCPA violations, , you’ll likely need to pay a filing fee to the court clerk. If you can’t afford the filing fee, you may qualify for a waiver.

Make sure you answer the complaint within the time allowed or a default judgment could be entered against you. A default judgment in the credit card company or debt buyer’s favor allows them to take more aggressive steps like:

• Wage garnishment — taking money from your paycheck

• Levying bank accounts — direct access to withdraw funds

These are harsh punishments to collect on a debt you may not even owe. A money judgment also lowers your credit score. Don’t let corporations bully you into joining the 95% of people who don’t contest complaints. Do surprise them by showing up and making them do the heavy lifting. Come prepared by knowing what to say — and not say — in court. The following section will provide you with some basic do’s and don'ts.

What’s the Best Defense Against a Credit Card Lawsuit?

You have several possible defenses to use if a creditor brings a lawsuit against you. Do your research, or get legal help, to see which defense(s) will work best in your case.

Defenses could involve:

• Fraud/identity theft

• Bankruptcy discharge

• Previous debt settlement

• Expired statute of limitations 

• Error by debt purchaser

• Credit card company’s mistake

Keep in mind that you’ll need to prove your defense to the court. You can do this with receipts, court documents, correspondence related to the debt, or affidavits.

Remind the suing parties of their burden of proof. If you have nothing else, answer that you may owe something, but not the amount they say you owe. With this answer, you're at least going to force the plaintiffs to prove that you owe the debt and in the amount they’ve claimed. 

If they can’t or aren’t prepared that day, any of the following may happen: 

• The judge could choose to dismiss your case.

• The creditor may agree to drop the lawsuit and offer a debt settlement agreement.

• You may be able to buy more time to work on an acceptable settlement with the creditor.

Let’s Summarize…

Although a credit card lawsuit can be scary, don’t fret. Credit card companies and debt collectors can be wrong. And often, they are in one way or another. They’re counting on you not to show up to court so they can win the case by default. Don’t lose like this. Answer. Show up. Fight. Your chances of winning or at least reducing the debt are far better than you think.