Credit card companies can initiate lawsuits against debtors who owe them money. In so doing, they are attempting to seek a judgment against the debtor in order to use more aggressive tactics to collect their debt. This can include asset seizure, garnishment of wages, or levies on your bank accounts. For those who own real estate, they can place liens on the real estate making it nearly impossible to sell until the debt is squared away.

The question then becomes: What should you do?

What Should I Do If I’m Being Sued by a Credit Card Company?

Being sued by a creditor gives them legal means to collect from you when you haven’t paid toward your debt.  If you receive a summons you may wonder whether or not to appear in court. Many debtors assume that if they don’t have the money, what is the point in showing up in court? While you should appear in court at the scheduled time listed on the summons, you are not required to do so.

If a creditor fails to show in court, the case may get dismissed since the creditor won’t be present to provide evidence regarding their claim. If a debtor fails to show up, it is often grounds for a default judgment. This allows the creditor to schedule an inquest or hearing to present information to the court without your presence; meaning you won’t be able to defend yourself while they present supporting documents of their claim.

Keep in mind, there are consequences that follow a default judgment. The creditor may obtain a judgment order that allows them to seize assets, property or wage garnishment to satisfy outstanding credit card debt. Some states have regulations in place that protect certain items or assets from being seized by creditors for unsecured debt.

You may choose to work out an agreement with the creditor before the court date on the summons.  If you and your creditor reach an agreement, a Notice of Settlement is filed with the court. This lets the court know an agreement has been reached and proceeding with the lawsuit isn’t needed. While you have the option to show in court, you should review all possible outcomes for either option.

Should I Try to Stop the Lawsuit Before It Starts?

Most creditors consider initiating a lawsuit a last resort. They’d prefer to settle the lawsuit with the debtor. Sometimes, creditors will settle the debt for less than is owed. You can attempt to negotiate down the amount you owe or restructure a payment plan that inspires the company to withdraw the lawsuit.

Should I Contact a Bankruptcy Attorney?

In some cases, creditors will be unwilling to accept a repayment plan or withdraw the lawsuit. In other cases, you may believe you do not owe the debt you’re being sued for. Those of us who specialize in debt collection law will be able to help you mount a better defense than you would likely make on your own. That’s our job. For you to be able to do the same thing, you would have to research the laws regarding civil actions and debt claims. It would take a lot of your time. It can be done, but it probably should not be.

What Will Your Defense Be?

In some cases, creditors who initiate lawsuits are simply attempting to scare a debtor into paying up. They may not have fully fleshed out case. If they’re lacking key information or they cannot prove you owe the debt, they’re going to lose. In addition, if they’ve initiated a lawsuit and the statute of limitations has run out on the debt, then they can face serious repercussions.

Understanding the Court Proceedings

In a civil lawsuit such as a creditor-debtor lawsuit, a creditor will seek to establish that you owe the debt. If you do owe the debt and you have no defense, the creditor’s attorney will likely seek a summary judgment against you. This saves them the effort of going to trial. In addition, your attorney can seek a summary judgment if the creditor cannot provide enough information.

What Are My Options If I Lose?

If you lose the lawsuit or cannot mount a reasonable defense, you still have options. The creditor may be willing to settle the debt in a more amicable way than levying your bank account or garnishing your wages. In addition, if you simply cannot repay the debt, and you don’t make enough money or have assets that can be seized under Texas law, then you can take satisfaction in having wasted more of your creditor’s money.

You can also:

  • Fight the judgment. If a default judgment has been rendered against you, you may still be able to fight the judgment. But you’ll need to have some proof that you are not responsible for the debt that is owed.
  • File bankruptcy. As a last resort, you can file for bankruptcy. Unsecured debt can be discharged in Chapter 7 completely, but that comes at a price. The price is that your credit report will have the bankruptcy on it for the next 10 years. On the other hand, there are some ways to rehabilitate your credit after bankruptcy. But it will take time and will be difficult to secure credit in the near future. Lastly, as part of a Chapter 7 bankruptcy, the court will take a look at what assets you do have and attempt to liquidate those in a bid to repay your creditors.

If You’ve Been Sued by a Credit Card Company, Contact a Texas Bankruptcy Attorney

If you’ve received a notice from a creditor that you are being sued for a delinquent debt, an attorney can help you fight the lawsuit against you. In other cases, we can negotiate a settlement that satisfies your creditors and you can afford. At the bare minimum, we can make recommendations on the best way to proceed.

Allmand Law Firm has helped Texas residents fight off creditors, hold those who use illegal debt collection tactics accountable, and defend themselves from lawsuits initiated by creditors. We also help those who are hopelessly in debt file for bankruptcy.

If you’re worried that a creditor lawsuit could cost you your assets, investments, or end up in bank levies and wage garnishments, then you’re right to be. Those are all possibilities when a creditor gets a favorable judgment in court. But our attorneys can help. Contact us to begin discussing your options today.