How to Respond When Sued by a Credit Card Company

Having worked as a debt collection attorney, I know exactly what the other side expects when they file a lawsuit. They expect you to ignore the papers. They expect you to be overwhelmed by the legal language. And they expect to get an easy default judgment. What they don’t expect is for you to be prepared and to respond correctly. That’s how you shift the power back in your favor. If you are being sued by a credit card company, I’m going to show you how to disrupt their playbook. We’ll cover the first things you must do, the critical deadlines you can’t miss, and how to build a defense that forces them to prove their case.

Key Takeaways

• Responding by the deadline is non-negotiable: You typically have only 14 to 30 days to reply to a lawsuit. Missing this window leads to an automatic loss, or default judgment, which allows the collector to garnish your wages or freeze your bank account.
• Force the collector to prove everything: The company suing you has the legal burden to prove the debt is yours, the amount is correct, and they have the right to collect it. You can challenge their case by questioning if the debt is too old or if they lack the proper paperwork.
• Filing a formal Answer is your strongest strategic move: Submitting an official response to the court prevents an automatic loss and signals that you are defending your rights. This action is often the key to gaining leverage for a better settlement or getting the case dismissed.

Sued by a Credit Card Company? Do This First.

Seeing a lawsuit with your name on it is a uniquely stressful experience. Your first instinct might be to panic or even ignore the papers, hoping they’ll just go away. Please don’t. Ignoring a lawsuit is the fastest way to lose automatically. The good news is that you have rights, and taking a few calm, calculated steps right now can completely change the outcome.

The clock is ticking—you typically have only 14 to 30 days to respond—so acting quickly is essential. But you don’t have to figure this all out alone. We’re going to walk through the first three things you need to do the moment you receive a lawsuit from a credit card company or a debt collector who bought the debt. Taking control starts with these simple actions. They will help you understand what you’re up against, protect your rights, and prepare for what comes next. Let’s get started.

Read the Lawsuit Papers

Before you do anything else, take a deep breath and read the documents you received. They will likely include a Summons and a Complaint. The Summons is the official court notice telling you that you’ve been sued. The Complaint is the document that explains why you’re being sued—who is suing you, how much they claim you owe, and the story behind the debt. Carefully reading these papers is your first step in building a defense. Pay close attention to the name of the plaintiff (the company suing you), the account number listed, and the total amount they are demanding.

Find Your Deadline to Respond

This is the most important piece of information in the entire packet. The Summons will state exactly how many days you have to file a formal response with the court. This deadline is non-negotiable. As the Consumer Financial Protection Bureau advises, it’s critical to respond to the lawsuit by the date written in the court papers. If you miss this deadline, the court can issue a “default judgment” against you, meaning you automatically lose the case. This allows the collector to pursue wage garnishment or freeze your bank account. Find that date, circle it on your calendar, and make it your top priority.

Gather Your Documents

Now it’s time to do some digging. Go through your files and collect every document you have related to this debt. Look at your own papers about the account, including old credit card statements, any letters or notices you’ve received from the original creditor or the debt collector, and any proof of payments you may have made. You’re looking for anything that can help you verify the debt is actually yours and that the amount is correct. Don’t worry if your records are incomplete. Just gather what you can find. This information will be incredibly valuable as you decide how to respond.

What Happens If You Ignore the Lawsuit?

Getting sued is overwhelming, and your first instinct might be to ignore the papers and hope the problem disappears. But ignoring a lawsuit is the one thing you should never do. It doesn't stop the legal process—it just takes away your chance to defend yourself and gives the company suing you a huge advantage. The consequences can be severe and long-lasting, affecting your income, your savings, and your financial future. Taking action is your best and only path forward.

The Risk of a Default Judgment

If you don't respond to the lawsuit by the deadline, the court can automatically rule in favor of the credit card company or debt collector. This is called a default judgment. It’s a legally binding decision that says you owe the debt, and it’s made without the court ever hearing your side of the story. The Consumer Financial Protection Bureau explains that when you fail to respond, the court can make a decision against you without your input. A default judgment is not just a piece of paper; it’s a powerful tool that gives the creditor the legal right to collect the money from you.

Wage Garnishment and Bank Levies

Once a creditor has a default judgment, they can use it to take money directly from you. One of the most common methods is wage garnishment, where they can legally order your employer to send a portion of your paycheck directly to them. They can also pursue a bank levy, which allows them to freeze your bank account and seize the funds to satisfy the debt. Imagine waking up to find your checking account empty or your paycheck significantly smaller. These aren't empty threats; they are very real and immediate consequences that happen to thousands of people who don't respond to a lawsuit.

Damage to Your Credit Score

Beyond the immediate financial hit, a default judgment can cause serious, long-term harm to your credit. The judgment becomes a public record and will likely appear on your credit report for up to seven years. The Federal Trade Commission warns that this negative mark can make it much harder to get approved for new credit, a car loan, or a mortgage. It can even impact your ability to rent an apartment or get hired for certain jobs, as many landlords and employers check credit as part of their background screening process. Responding to the lawsuit is your best chance to avoid this lasting damage.

How to Check If the Debt Is Legit

Before you do anything else, it’s crucial to verify that the debt is actually yours and that the company suing you has the right to do so. Just because you’ve received a lawsuit doesn’t mean the claim is automatically valid. Debt buyers often work with incomplete or inaccurate records, and mistakes happen. Taking the time to investigate the claim is your first line of defense. It forces the plaintiff to prove their case and can uncover critical errors that might get the lawsuit dismissed entirely.

Demand Proof of the Debt

The burden of proof is on the company suing you. It’s their job to prove to the court that the debt is real, the amount is correct, and you are the person who owes it. You have the right to demand this proof. This includes documentation like the original signed contract with the credit card company and a full history of the account showing how they calculated the total amount they claim you owe. A great first step is sending a debt validation letter, which formally requests this information. If they can’t provide this basic paperwork, they may not be able to win their case in court.

Check the Statute of Limitations

Every state has a law called the statute of limitations, which sets a time limit for how long a creditor can sue you over a debt. This clock usually starts ticking from the date of your last payment. For credit card debt, this period is typically between three and six years, but it varies significantly by state. If the statute of limitations has expired, the debt is considered "time-barred." While you still technically owe the money, they have lost the legal right to sue you to collect it. This is a powerful defense, so it’s one of the first things you should investigate.

Confirm Who Is Suing You

Take a close look at the plaintiff's name on the lawsuit. Is it your original credit card company, or is it a name you don’t recognize? Original creditors often sell old, unpaid debts to third-party debt buyers for pennies on the dollar. If a debt buyer is suing you, they must prove they have the legal right to collect the debt. This means they need to produce a "chain of title"—a paper trail showing every time the debt was sold, from the original creditor all the way to them. Without this proof, they haven’t established their legal standing to sue you, which can be a strong basis for your defense.

Your Options for Responding to the Lawsuit

Once you’ve taken a deep breath and reviewed the lawsuit, it’s time to decide on your next move. You have more power here than you might think, and you don’t have to let the debt collector dictate the outcome. Generally, you have three main paths you can take: formally responding to the court, trying to negotiate with the plaintiff, or arranging a way to pay back the debt. Each option has its own pros and cons, and the right choice depends entirely on your specific situation. Let’s walk through what each one involves.

File an Answer

The most important thing you can do is respond. Filing an “Answer” is the official, legal way to reply to the lawsuit. It’s a formal document you file with the court that addresses the claims made against you. Ignoring the lawsuit is the worst-case scenario, as it almost always leads to the debt collector winning automatically through something called a default judgment. By filing an Answer, you protect your rights and force the collector to actually prove their case. This single step is essential to protect your finances and prevent the creditor from getting an easy win. It’s your chance to raise defenses, like questioning if they even own the debt or if the debt is too old to collect.

Negotiate a Settlement

You can also try to settle the debt directly with the person or company suing you. Often, debt collectors buy debts for pennies on the dollar and are willing to accept less than the full amount to close the case and avoid a lengthy court process. You can negotiate a settlement before the court issues a final judgment. For example, if you’re being sued for $2,000, you might offer to pay a lump sum of $1,500 in exchange for them dropping the lawsuit. If you go this route, it is absolutely critical to get any agreement in writing before you send any money. A written agreement ensures the lawsuit will be dismissed and the debt will be considered settled.

Arrange a Payment Plan

If you know the debt is yours and you can’t afford to pay it off in one lump sum, you might be able to arrange a payment plan. This involves negotiating with the creditor to pay off the debt in smaller, monthly installments. However, you need to be careful. In some states, making even one payment can reset the clock on the statute of limitations, which could make an old debt legally collectible again. Before agreeing to anything, make sure you understand the terms and can realistically afford the payments. If you do reach an agreement, just like with a settlement, get it in writing to protect yourself.

Know Your Rights and Common Defenses

When you’re facing a lawsuit, it’s easy to feel like the other side holds all the cards. But that’s not true. You have rights, and the company suing you has rules it must follow. Understanding your rights and the common legal defenses available is the first step toward taking back control. Often, the burden of proof is on the debt collector, not you. They have to prove you owe the debt, that they have the legal right to collect it, and that the lawsuit itself is legitimate. Many people assume that because they once owed money, they have no choice but to pay whatever the lawsuit demands. This is exactly what debt collectors count on.

These defenses aren't loopholes; they are fundamental parts of the legal process designed to ensure fairness. By raising them in your official response to the court, you force the plaintiff to build a proper case with solid evidence. You’d be surprised how often they can’t. They may lack the original contract, the complete payment history, or even proof that they legally own the debt. Let’s walk through some of the most powerful tools you have at your disposal.

Your Rights Under the FDCPA

The main law protecting you from unfair treatment is the Fair Debt Collection Practices Act (FDCPA). This federal law sets clear rules for what debt collectors can and cannot do. For example, they can't harass you with constant calls, use deceptive tactics to get you to pay, or contact you at unreasonable hours. When you respond to a lawsuit, you are exercising your rights and forcing the collector to operate within these legal boundaries. The FDCPA ensures you can dispute the debt and demand verification, which is a critical part of defending yourself. Knowing these rules helps you identify when a collector is crossing a line and gives you the confidence to stand up for yourself.

The Debt Is Too Old (Statute of Limitations)

Think of a debt having an expiration date for legal action. This is called the statute of limitations, and it’s one of the strongest defenses you can have. Each state sets a time limit—usually between three and six years—on how long a creditor can sue you for an unpaid debt. The clock typically starts from the date of your last payment. If the company suing you has waited too long, the debt is considered "time-barred," and they can no longer use the courts to collect it. You must raise this defense in your official Answer to the lawsuit for the court to consider it.

They Can't Prove They Own the Debt

Here’s something many people don’t realize: the company suing you might not be your original credit card company. Debts are often sold and resold to third-party debt buyers for pennies on the dollar. If a debt buyer is suing you, they have the legal burden to prove they have the right to collect on that specific account. This is called "standing." They must provide a clear paper trail, or "chain of custody," showing how they acquired the debt from the original creditor. If they can't produce this documentation, the court may dismiss their case entirely. It’s their job to prove it, not yours to disprove it.

They Don't Have the Paperwork

Even if the company suing you can prove they own the debt, they still have to prove the details of the debt itself. This means they need the original signed contract, a complete history of payments, and a breakdown of how they calculated the total amount they claim you owe, including interest and fees. It’s surprisingly common for debt collectors, especially third-party buyers, to lack this fundamental paperwork. By filing an Answer to the lawsuit, you force them to produce these documents. If they can’t provide the necessary proof, their case against you weakens significantly, which can lead to a dismissal or a much more favorable settlement.

How to File Your Response Correctly

Once you’ve decided to respond to the lawsuit, filing your documents correctly is the most critical step. The legal system runs on rules and procedures, and a small mistake can unfortunately get your response thrown out. Think of it as a three-part process: following the court’s specific rules, officially notifying the other side, and making sure your documents are prepared properly. Getting these details right ensures the court will hear your side of the story and protects you from an automatic loss. It might feel intimidating, but breaking it down into these manageable steps makes the process much clearer. Each piece is a building block in your defense, and handling them with care gives you the best possible chance of a fair outcome.

Follow Court Rules and Deadlines

Every court has its own set of rules for how documents should be formatted, what information to include, and how they must be filed. More importantly, you have a strict deadline—usually between 14 and 30 days—to submit your response. If you miss this window, the court can issue a default judgment against you without ever reviewing your case, which means you automatically lose the lawsuit. This is not a flexible suggestion; it's a hard stop. Pay close attention to the instructions in the summons you received, as they will tell you exactly when and where you need to file. Mark this date on your calendar immediately.

Serve the Other Party (Send Them a Copy)

Filing your Answer with the court isn't enough; you also have to formally deliver a copy to the plaintiff (the company suing you). This process is called "serving" the other party, and it’s a required step that proves you notified them of your response. You’ll typically need to include a document called a "Certificate of Service" with your court filing. This is your sworn statement confirming the date and method you used to send the documents to the plaintiff’s attorney. Failing to properly serve the other party can invalidate your response, so don’t skip this crucial step.

Prepare Your Documents

Your formal response, known as the "Answer," needs to address every claim made in the lawsuit complaint. You must go through their complaint paragraph by paragraph and state whether you admit, deny, or lack the information to respond to each allegation. This is also where you will list your affirmative defenses, which are the legal reasons why the plaintiff shouldn't win. For example, you might argue that the statute of limitations has passed or that they can't prove they own the debt. To prepare a proper Answer is essential for defending your rights. It’s your official opportunity to challenge the debt and force the credit card company to prove its case.

Settlement Strategies That Actually Work

Even with a strong defense, settling the lawsuit might be the most practical path forward. A settlement is an agreement you make with the debt collector to resolve the lawsuit for a specific amount of money—often less than what they claim you owe. For debt collectors, a settlement means they get paid without the time and expense of a full court battle. For you, it means putting the lawsuit behind you and avoiding the risk of a judgment.

Many people don't realize that the amount owed is often negotiable. This is especially true if a debt buyer is suing you, as they likely purchased your debt for a fraction of its original value. This built-in profit margin gives them plenty of room to make a deal. Filing an Answer to the lawsuit is a critical first step that gives you leverage. It signals to the collector that you won't be an easy default judgment and that they’ll have to actually prove their case, which makes them far more willing to come to the table and negotiate a fair resolution.

Negotiate for a Lower Amount

Your first move in any negotiation should be to offer less than you’re ultimately willing to pay. If you’re being sued for $2,500, for example, you might start by offering to pay 40% or 50% of that amount. The collector will likely counter with a higher number, and you can negotiate from there. Before you make an offer, decide on the absolute maximum you can afford to pay as a lump sum and don't reveal this number. Having a firm limit keeps you from agreeing to a settlement that worsens your financial position. Remember, showing up to the fight by filing a response is what makes a favorable negotiation possible in the first place.

Set Up a Manageable Payment Plan

If paying a single lump sum isn’t realistic, you can negotiate a payment plan. However, you need to be careful here. In some states, making a payment can restart the clock on the statute of limitations, which could make an old debt legally enforceable again. Before agreeing to anything, you should create a budget to determine exactly what you can afford to pay each month without fail. A payment plan only works if you can stick to it. If you agree to a plan and then miss a payment, the collector could pursue the lawsuit for the full original amount, leaving you back at square one. Always prioritize a plan that is sustainable for your financial situation.

Always Get the Agreement in Writing

This is the golden rule of settling a debt: a verbal agreement is not enough. Once you and the collector agree on the terms—whether it’s a lump-sum payment or a payment plan—do not send any money until you have a signed, written agreement. This document is your proof that the debt is settled. The FTC advises that the agreement should state that the amount you’re paying will satisfy the debt completely. It should also confirm that the collector agrees to dismiss the lawsuit against you "with prejudice," which means they can’t sue you for the same debt again. Keep this document and records of your payments in a safe place forever.

When to Get Legal Help

Deciding whether to hire a lawyer can feel like another overwhelming choice on top of everything else. The good news is that you don't always need to spend thousands on legal fees to protect yourself. Many debt collection lawsuits follow a standard process, and you have several options for getting help. The key is to honestly assess your situation and find the right level of support for your specific case. Think of it less as an all-or-nothing decision and more about finding the right tool for the job. Sometimes you need a full legal team, and other times you just need a clear guide and the right documents to move forward with confidence.

If Your Case Is Complicated

While you can handle many debt lawsuits on your own or with some help, certain situations benefit from a lawyer's direct guidance. If the amount of debt is very high, if you believe you’re a victim of identity theft, or if the lawsuit involves complex legal questions, it’s wise to seek professional legal advice. A lawyer can help you understand your specific rights under federal and state laws, which can be critical when the stakes are high. If you read the lawsuit and feel completely lost or believe the creditor has broken the law in their dealings with you, a consultation with an attorney can bring much-needed clarity.

Find Free or Low-Cost Legal Aid

If you need legal advice but are worried about the cost, you may have options. Many organizations are dedicated to helping people with limited incomes access the legal system. You can search for local assistance through the Legal Services Corporation, which funds legal aid offices across the country. Another excellent resource is the American Bar Association’s pro bono directory, which can connect you with volunteer lawyers in your area. These services can provide free legal clinics, direct representation, or advice to help you figure out your next steps without the financial strain.

Affordable Alternatives to a Lawyer

For many people, the best path lies between going it alone and hiring an expensive attorney. If your case is straightforward but you need help preparing and filing your official response, you can use online tools to generate the necessary legal documents. This approach gives you a powerful way to respond to the lawsuit correctly and on time. LawLaw was created for this exact situation. Our platform guides you through a simple questionnaire to create a customized, attorney-reviewed Answer to your lawsuit. We make sure your documents are formatted correctly for your specific court, helping you protect your rights with confidence and without the high cost of a lawyer.

How to Rebuild After the Lawsuit

Once the lawsuit is resolved, you can shift your focus toward rebuilding your financial standing. This process is a marathon, not a sprint, but taking small, consistent steps will put you on the right path. The goal is to create healthy habits that not only improve your credit but also give you peace of mind and prevent future debt problems. By focusing on what you can control now, you can build a stronger financial future.

Repair Your Credit Score

Repairing your credit score is entirely possible with a clear plan. The most impactful action you can take is to make all your payments on time going forward. Your payment history is the biggest factor in your credit score, so consistency is key. Next, focus on your credit utilization ratio—that’s the amount of debt you have compared to your credit limits. A good rule of thumb is to keep your balances below 30% of your limit. If you’re struggling to get approved for new credit, consider a secured credit card. It requires a cash deposit, which makes it a great tool for proving your reliability and rebuilding your credit history.

Prevent Future Debt Issues

To avoid finding yourself in this situation again, it’s crucial to establish strong financial habits. Start by creating a realistic budget that tracks all your income and expenses. This simple step gives you a clear picture of your finances and helps you stay in control. You can also set up automatic payments for your bills to ensure nothing falls through the cracks. Get into the habit of checking your credit report regularly from all three bureaus. This allows you to catch any errors and monitor your progress. If you feel overwhelmed, a non-profit credit counseling agency can offer guidance and help you create a sustainable debt management plan.

Related Articles

• What to Do When a Credit Card Sues You
• Getting Sued by a Credit Card Company
• What to Do If Being Sued by Credit Card Company

Frequently Asked Questions

Do I still need to respond to the lawsuit if I know I owe the debt? Yes, absolutely. Responding to a lawsuit is about more than just denying the debt—it’s about protecting your rights and making the plaintiff legally prove their case. Even if the debt is yours, the amount could be wrong, or the company suing you might not have the legal standing to collect it. Filing a formal Answer prevents them from getting an automatic win and gives you the leverage to negotiate a fair settlement.

What's the difference between settling the debt and filing an Answer? Filing an Answer is the official legal step you take to participate in the lawsuit and defend yourself. Settling is the process of negotiating an agreement with the creditor to resolve the debt, often for less than the full amount. The two actions work together. By filing an Answer, you show the collector you won't be an easy win, which often makes them far more willing to negotiate a favorable settlement with you.

Can I handle this myself, or do I absolutely need a lawyer? You don't always need to hire an expensive lawyer. For many straightforward credit card lawsuits, you can effectively respond using tools designed to help you prepare and file the correct legal documents. This approach is a great middle ground that ensures your response is done right without the high cost of full legal representation, giving you the confidence to move forward.

Will I have to go to court if I file a response? Not necessarily. In fact, the vast majority of debt collection lawsuits are resolved long before they ever reach a courtroom. Filing a formal Answer is often the first step toward opening a dialogue with the plaintiff to negotiate a settlement. The goal of responding is to resolve the issue, and that frequently happens without ever having to step foot in front of a judge.

What is the most common mistake people make when they get sued? The single biggest mistake is ignoring the lawsuit. It’s completely understandable to feel overwhelmed, but doing nothing is the fastest way to lose. If you don't respond by the deadline, the court will likely issue a default judgment against you, giving the collector the power to garnish your wages or freeze your bank account. Taking that first step to respond is the most important thing you can do.