Can I Be Sued by a Credit Card Company? What to Know

Falling behind on credit card payments can have serious consequences If you default on a credit card debt, the company can take legal action against you, including filing a lawsuit. So the short answer is yes, you can be sued by a credit card company for unpaid debt.

Being taken to court for credit card debt is a scary prospect. But it doesn’t have to be the end of the world if you understand your rights and take proactive steps. This article will explain when and why a credit card company might sue, how the process works, and most importantly, what you can do to respond appropriately.

When Can a Credit Card Company Sue You?

Credit card companies cannot sue over a debt unless certain conditions are met:

• You have a credit card contract. When you open a credit card account, you agree to the terms in the cardholder agreement, including making monthly payments. Failure to pay is a breach of that contract.

• The debt is valid. The credit card company must prove you actually owe the debt and it belongs to you. Mistakes do happen so verify the accuracy.

• The statute of limitations has not expired. Each state sets time limits, usually 3-6 years, for how long a creditor can sue over a debt. The clock starts on your last payment date.

If those three conditions are met the credit card company has the legal right to take you to court for nonpayment of debt. They do not need your permission to file a lawsuit.

The Debt Collection Lawsuit Process

If you default on a credit card, meaning you are 180 days past due, the company will likely send the account to collections first. Collectors will attempt to get you to pay through letters and phone calls.

If the debt goes unpaid, the collector can file a civil lawsuit. Here’s how it works:

• The collector’s attorney will submit a complaint with your local civil court, naming you as the defendant.

• You will be served a summons, detailing the lawsuit allegations and requiring you to respond.

• The court will schedule a hearing or trial, which you must attend.

• If you lose, the collector will request a judgment against you for the debt plus legal fees.

• The judge can order wage garnishment, property liens, or asset seizure to enforce collection.

What to Do if Sued for Credit Card Debt

Being sued can be intimidating but panicking helps no one. You have options. Here are steps recommended by the Consumer Financial Protection Bureau:

Respond to the lawsuit by the deadline given, either yourself or through an attorney. Not responding leads to automatic default.

Gather documentation like your credit card agreement to verify if the debt is valid and yours.

Consult an attorney knowledgeable about consumer debt cases. They can advise your rights.

Attend all court proceedings so you fully understand what’s happening.

Try to negotiate a settlement for less than the full amount. Get any agreements in writing.

Consider bankruptcy if you truly can’t pay. This pauses collections while debts are discharged.

Defend yourself in court by requiring the company to prove you owe the specific amount. Hold them accountable.

How Being Sued Can Affect Your Credit

A lawsuit itself does not directly harm your credit, as judgments no longer show up on credit reports. But missed payments, collections accounts, and other factors related to defaulting on a credit card will cause your credit score to plummet.

After a lawsuit, you may have trouble getting approved for loans or credit cards. Seeking professional credit counseling can help you rebuild credit over time. Focus on making on-time payments and keeping credit card balances low.

Tips to Avoid Getting Sued

You can reduce the risk of facing a credit card lawsuit by:

• Staying in communication with creditors if you fall behind on payments. Work out alternative payment arrangements if possible.

• Responding promptly to all notices and phone calls from collectors. Negotiate a settlement.

• Recording and keeping proper documentation of your debts and payments.

• Understanding your rights under consumer protection laws like the Fair Debt Collection Practices Act.

• Consulting a credit counseling agency for guidance on managing unaffordable debts. They can explain all your options.

• Acting quickly if sued and not ignoring any notices from the court. Time limits matter.

• Hiring a consumer debt attorney for legal advice and representation if needed.

The Bottom Line

Yes, a credit card company can sue you for unpaid debt owed under a valid credit agreement. If sued, stay calm and don’t ignore it. Seek legal guidance on responding properly in court and negotiating the best resolution. With the right help and an understanding of your rights, you can get through it.