Defensive strategies in court for credit card debt lawsuits

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Defensive strategies in court for credit card debt lawsuits

When life takes a hard turn—job loss, illness, or the loss of someone you love—keeping up with bills sometimes takes a back seat. If you’ve fallen behind on credit card payments, there’s a chance your creditor could take you to court to collect the debt. The larger the balance, the more likely they are to try.

If that happens, the steps you take next—and the legal support you get along the way—could make a big difference in how things turn out. Freedom Debt Relief looks at what happens when credit card debt goes unpaid, and what you can do if you find yourself in a legal bind.

This information is intended for general informational purposes only. It shouldn’t be taken as legal advice. For personalized legal advice, consult with a qualified attorney licensed to practice law in your state.

Key Takeaways:

If you get sued for unpaid credit card debt, there are several ways an attorney could help you defend yourself.
These strategies might include disputing the facts of the case or finding a reason to get the suit thrown out.
A strong defense could help you win the lawsuit or give you leverage to negotiate a favorable settlement.

Understanding Your Rights When Sued for Credit Card Debt

Being sued for credit card debt can come as a shock. Stay calm and take it one step at a time. It’s not a one-sided process. With the right information, you can get through this. You have rights, and you’ll get a chance to defend yourself.

Let’s take a look at some of the rights you have when you’re sued for credit card debt.

You will get written details about why you’re being sued

When you receive a summons telling you you’re being sued, it should come with another document called a complaint. The complaint should include basic details about the lawsuit, including:

Who is suing you.
Why they’re suing you.
How much money they’re asking for.

This is all important information, because when you have these details in front of you, they can help you figure out how to defend yourself against the lawsuit.

You are allowed time to respond

The summons should specify a deadline for responding—typically 30 days from when you receive this summons.

This time gives you a chance to get legal advice and to compare your records with the details of the complaint. If you find any inaccuracies, you’ll have some time to create a response that points them out. Go through the complaint to check for other reasons the lawsuit isn’t valid.

You can ask for relevant information from the plaintiff

Before the court date, there’s time for a process called discovery. That’s when both sides of the lawsuit can request information from the other.

In a lawsuit over unpaid credit card debt, this information may include:

Copies of the original agreement with the credit card company.
Details on charges and balances that make up the debt.
Documentation of how any interest and fees included in the debt were calculated.

You’ll get the chance to defend yourself

You’ll get to respond to the complaint in writing, and if the lawsuit moves forward, you’ll be able to defend yourself in court.

When you’re first sued, the most important thing is to meet the deadline for responding to the summons. If the deadline passes, the judge could hand the other side a win. Responding on time protects your right to make your case.

What to Do if You’re Sued for Unpaid Credit Card Debt

Lawsuits make their way through the system in a specific way, and understanding that process could help you defend yourself.

If you receive a summons letting you know you’re being sued, don’t panic. You just have to work through the process step by step:

Note the deadline.
Consider working with an attorney or researching legal aid.
Look for any inaccuracies in the summons.
Start a file system that contains all your important documents.

First, make a note of the deadline to respond to the complaint. The summons should state the deadline and give instructions for your next steps. Be sure to meet the deadline. Your creditor could get an automatic win if you don’t respond.

You may want to hire an attorney to represent you. It’s not legally required, but having an attorney represent you in a credit card debt lawsuit could lead to a more favorable outcome.

If you can’t afford an attorney, you may be eligible for help through your local Legal Aid Society office or volunteer lawyers in your area. Check with your company’s HR department to find out if legal services are offered as part of an employee assistance program.

If you’re planning on getting legal help, it might be best to line it up before you respond to the complaint. If there isn’t enough time, you’ll have a chance to retain an attorney later.

A summons from your credit card company probably won’t come out of the blue. Credit card companies typically first send several notices asking you to pay off your debt. A lawsuit is usually a last resort, since it costs money.

Chances are, before you receive a summons, you’ll already know who the creditor is and why they’re claiming money from you. When you receive a summons, it’s time to dig deeper into that background.

Read the complaint carefully and make a note of any inaccuracies. Then review the history of the account in question. Collect any paperwork you can find, including your credit card agreement and statements. Compare the amount the credit card company claims you owe with your own records.

This may involve a lot of detail, so getting organized is key. Attach notes to any documents that might prove inaccuracies in the complaint. Keep all this information in a file you can access easily when needed. Choose a system that you’ll be able to manage. Most office and stationery stores sell organizing systems for documents, including:

A standing magazine file that holds different file folders.
A plastic accordion file with multiple pockets.
A three-ring binder with pockets to hold documents.

Getting your facts lined up is a big part of preparing to defend yourself against a credit card debt lawsuit. An attorney or other legal advisor may be helpful in helping you find out which defenses you can use under the law.

Possible Defensive Strategies for Credit Card Lawsuits

The right approach to a credit card lawsuit will depend on your specific situation. Here are some potential defenses for a credit card debt lawsuit.

Mistaken identity and identity theft defenses

Identity theft, a growing problem, occurs when someone uses your personal information, such as your name, address and Social Security number, to open accounts in your name. Often, the victim first finds out about this when the creditor starts contacting them for payment.

If a legal complaint is based on an account you didn’t open, you may have been the victim of identity theft. Fortunately, this is a strong defense in a credit card debt lawsuit. Here are some general steps to take:

Immediately notify the police about the identity theft. Keep a copy of any crime report they produce. This will help support your defense in the credit card lawsuit. It may even help them track down the criminal responsible.
Include information on why you believe this to be a case of identity theft in your response to the complaint.
In the discovery process, request proof that the accounts involved were opened with your signature or other legal authorization.

It’s also possible the plaintiff is suing you because they’ve mistaken you for someone else. For example, someone with a similar name and address may actually be the owner of the credit card account in question. In that case, requesting copies of the agreements that opened the account may help you clear things up.

Whether it’s a mistaken identity or identity theft, the burden of proof is on the plaintiff, not on you. They have to prove you opened the account and made the charges.

Fraudulent charges

Identity theft can involve someone opening an account in your name. Another form of fraud is when someone uses your account to make charges without your authorization.

If you find charges on your credit card statement that you don’t recognize, someone may have fraudulently used your account.

The Fair Credit Billing Act limits your liability if you’re the victim of fraud. You must notify the credit card company within 60 days of the statement date. If you’ve already done this, you can work with an attorney to prove it.

It’s always a good idea to communicate with your credit card company in writing when disputing fraudulent charges. If you use email, print or screen-capture every message. If you use snail mail, keep copies and get proof of delivery for anything you send to your credit card company.

Authorized user defense

If you were an authorized user but not the primary account holder of a credit card, you might not be liable for debt on that card. This could be a strong defense against a lawsuit over credit card debt.

An authorized user is a person the primary account holder has allowed to use their account. However, authorized users are not generally liable for debt on that card. This is true even if they made the purchases that led to the debt.

This is an important difference between an authorized user and a joint account holder or cosigner. If you signed on as a joint account holder or a cosigner, you share full responsibility for the debt with the primary account holder. In other words, either one of you (or both) can be sued for payment.

If you’re not sure what your status is on an account, the account documents should clarify it. You may have account agreements on file that state whether you cosigned for an account or are merely an authorized user. If you can’t find these documents, you can request that the credit card company provide them.

In some states, the authorized user defense may not help you if you were married to the primary account holder. If you live in a community property state, couples typically share responsibility for debts incurred during the marriage.

Erroneous information

Credit card company records aren’t always correct. And when credit card companies transfer debts to collection agencies, those debt collectors may end up with the wrong information. A lawsuit could also be brought by a debt buyer based on inaccurate information.

That’s why checking your records against the claims made in the legal complaint is so important. It’s a good idea to work with your lawyer to identify:

Erroneous charges.
Duplicate charges.
Payments you’ve made that haven’t been reflected.
The date of delinquency and whether it’s correct.
Whether the correct interest rate and fees were applied to your balance.
Whether other charges claimed in the lawsuit, such as legal fees and collection costs, are reasonable.

Even if you’re responsible for the debt, disputing incorrect information could reduce the amount you owe. The person suing you has to prove the amount they’re claiming is correct—and that’s to your advantage.

The credit card company may be asked to provide account agreements that show:

Interest rates, fees, and other charges they’re entitled to collect.
How interest rates and fees were applied and for what periods.
Sales receipts that prove you made purchases on the account.

Payment defense (full or partial)

You’re not liable for a debt you’ve already paid. However, you may have to prove that you’ve made those payments.

Check stubs and bank statements, whether digital or on paper, should help you prove what payments you’ve made. If you no longer have those records, there’s a good chance your bank can provide them.

Proof of payment applies not just to how you paid your credit card bills, but also to when you made those payments. This can help you dispute how interest and late fees were applied to your balance.

Having proof that you paid in full and on time could help you get a case dismissed or help you win if the case goes to trial. Even if you can’t prove you’ve paid your balance in full, partial payments could reduce the amount of your liability.

Statute of limitations

Debt collectors have a time limit for suing you, known as a statute of limitations. This time limit varies from state to state. It’s typically between three and 10 years, but could be shorter or longer.

A local attorney should be familiar with your state’s statute of limitations. If the lawsuit wasn’t begun within the time limit, your attorney could ask the judge to throw out the lawsuit entirely.

Lack of standing

Only certain people or companies can legally sue you. The right to sue over a particular matter is known as standing.

A credit card company will often sell credit card debt to a debt collection firm. When that happens, the debt collector needs to prove they have bought your specific debt and have the right to sue you for it. Proving this may be more difficult than it seems. Lack of standing could get the lawsuit dismissed.

Violations of debt collection rules

The Fair Debt Collection Practices Act (FDCPA) is a federal law that limits the tactics debt collectors can use to recoup debts. Keep a record of any contact you receive from debt collectors, especially if you feel they’re harassing you. It may be that they’ve used illegal tactics, and the collection calls can be stopped.

The FDCPA is designed to prevent debt collectors from using abusive, unfair, or deceptive practices. Some examples of practices that may be violations of the FDCPA are:

Misrepresenting the amount owed or other aspects of the debt.
Threatening to have you arrested for nonpayment.
Trying to collect extra charges that aren’t allowed by your agreement with the creditor or by law.
Communicating with you on social media in a way that can be seen by others.
Sending you mail in an envelope that indicates it is from a debt collector.
Calling you before 8 a.m. or after 9 p.m.
Contacting you at work if you’ve asked them not to.
Contacting you directly when you’ve asked them to deal with your attorney.
Using threatening or profane language.
Misrepresenting who they are.

Many states require debt collectors to be licensed. A debt lawsuit attorney can tell you if your state requires this, and if the debt collector suing you has the right license. Your state may also have additional restrictions on debt collectors. You can check for these to find out if the debt collector has violated state laws.

Being victimized by violations of debt collection rules may not be a sufficient legal defense to win a credit card debt lawsuit, but it could help you in other ways. Violations could be grounds for a countersuit based on the illegal practices of the debt collector. That could give you leverage to help you settle the debt.

Improper service defense

The plaintiff is responsible for making sure you received proper notice of the lawsuit. Failure to do this isn’t enough to have the case dismissed. However, it could buy you more time. The plaintiff will need to correct the problem. In the meantime, you’ll have more time to prepare your defense.

Sometimes, there are problems with the service.

In the content of a summons, the person suing you might not have accurately identified the court where the case will be heard. The summons might not have given you a reasonable amount of time before you have to appear in court.

Problems with how the notice was served typically deal with the physical delivery of the summons to the person being sued. In most cases, notice of a lawsuit must be delivered by an adult who isn’t involved in the lawsuit. The notice should include a summons to appear in court and a complaint that details the grounds for the lawsuit. It must be delivered directly to the defendant or left with a responsible adult with whom the defendant has a relationship.

In other words, leaving notice of a lawsuit with a child or an unidentified adult at your address isn’t good enough. The server also can’t leave the notice in the common area of an apartment building. Finally, the person serving the notice must sign an affidavit attesting to how and when it was delivered.

Debt Settlement

In debt settlement, you negotiate with a creditor to accept less than the full amount you owe. Your creditor might do this if they believe you won’t be able to pay the full amount. They may also consider a settlement to be a cheaper option than continuing with a lawsuit.

Debt settlement may be worth considering if you know you legitimately owe the money and your attorney doesn’t think you have a strong legal defense against the lawsuit. An attorney should be able to advise you if a debt settlement makes sense.

If you decide to use debt settlement, your attorney may be able to negotiate a settlement for less than the full amount you owe. You could also attempt this negotiation yourself or work with a professional debt settlement company.

Bankruptcy

Bankruptcy is a legal process that could give you credit card debt relief. You may be eligible to have some or all of your debts forgiven in bankruptcy.

If you file for bankruptcy, one of the first things that happens is a legal order that stops most creditors from continuing debt collection actions against you, including lawsuits. An attorney can discuss the benefits and drawbacks and help you decide if bankruptcy makes sense for your situation.

An attorney can also let you know if you qualify and for what type of bankruptcy. Chapter 7 bankruptcy, which lets you walk away from unsecured debts in a matter of months, requires your income to be below a certain limit that’s based on where you live.

Defenses That Won’t Work

There are many effective ways to defend against a credit card debt lawsuit, but not every defense will hold up in court. Here are some examples of invalid defenses against a credit card lawsuit:

Financial hardship. Losing a job and having unexpected expenses don’t automatically absolve your legal obligation to repay money you’ve borrowed.
Divorce decrees. Under the terms of your divorce, your ex-spouse may have agreed to pay off a debt. However, if your name was on that debt originally, in the eyes of the creditor (and the law), you’re responsible for it.
Prior arrangements with the creditor that are no longer in effect. For example, maybe you had negotiated an easier payment arrangement but haven’t kept up with the terms. Unless the arrangement is on paper and you’ve kept up with its terms, a creditor is likely to have grounds to sue you for payment.

Focus instead on the defenses mentioned here, preferably under the guidance of an attorney. If more than one defense applies to you, so much the better. That could make your case stronger.

A stronger case does more than just boost your chances of winning the lawsuit. Even if you do owe some money, it could help you reduce the judgment against you. It could also put you in a stronger position to negotiate a debt settlement even before the case goes forward.

Hang in There—You Can Do it

Ultimately, the best way to defend yourself against a credit card debt lawsuit is to hire an attorney who can decide whatever strategy will be most effective. The strategy your lawyer chooses will depend on the specifics of your situation.

One way you can help is by giving your attorney as much information as possible, such as: