What Happens If You're Sued by a Credit Card Company?

A thick envelope of legal papers from a debt collector is designed to intimidate you into inaction. They are counting on you to ignore it. When you don’t respond, they win a default judgment, which is a court order giving them the power to take your money. But what if you fought back? This guide explains exactly what happens if you get sued by a credit card company and how filing a formal response changes the entire dynamic. It forces the collector to prove their case and gives you the leverage to protect your finances. Your response is your power.

Key Takeaways

• Ignoring a lawsuit is the worst mistake you can make: Doing nothing leads to an automatic loss called a default judgment, which gives the creditor legal power to garnish your wages, freeze your bank accounts, and severely damage your credit.
• Filing a formal "Answer" is your most powerful first step: This official court document is how you respond to the lawsuit. Submitting it on time prevents an automatic loss and forces the debt collector to actually prove you owe the money.
• Responding puts you back in control: Once you file an Answer, you gain leverage. This opens up your options to challenge the debt's validity, raise legal defenses, or negotiate a settlement for a lower amount.

What Is a Credit Card Lawsuit?

Getting a thick envelope of legal papers can be terrifying, but understanding what’s happening is the first step toward taking control. A credit card lawsuit is a formal legal action a credit card company or a debt collector takes to recover money they believe you owe. It’s not just another collection call; it’s a civil case filed in court. This means you’re being formally accused of not paying a debt, and the company is asking a judge to issue an order that forces you to pay.

While it feels personal and incredibly stressful, this is a standard business process for creditors. The good news is that you have rights, and there’s a clear process to follow. Let’s break down what it means to be sued, why it happens, and the key terms you’ll see in the paperwork.

What It Means to Be Sued by a Credit Card Company

When you’re sued, you’ll receive official court documents, usually a “Summons” and a “Complaint.” The Summons is a notice telling you a lawsuit has been filed and that you have a specific deadline to respond. The Complaint outlines who is suing you, why, and how much they claim you owe. It’s critical to respond to the lawsuit before the deadline. Ignoring these papers won’t make the problem disappear—it guarantees you will lose the case automatically.

Why Credit Card Companies Sue

A lawsuit is usually a creditor's last resort. They typically only take legal action after months of trying to collect the debt through calls and letters. Often, the original credit card company sells your debt to a third-party debt collection agency. These debt buyers frequently file lawsuits as their primary way of collecting. For them, a lawsuit is a powerful tool to get a court order, which gives them more ways to collect the money from you.

Key Legal Terms to Know

Your paperwork will have legal jargon, but a few terms are essential. The Summons is the official court notice, and the Complaint explains the creditor’s claims. The most important term is Default Judgment. This is what happens if you fail to respond in time. The court automatically rules for the creditor, which can lead to serious consequences like having your wages garnished or your bank accounts frozen.

What Happens When You're Served with a Lawsuit?

Being "served" with a lawsuit is the official start of the legal process. It means the credit card company, or a debt collector who bought the debt, has filed a case against you in court and is now formally notifying you. This isn’t just another threatening letter in the mail; it’s a legal action that requires your immediate attention. The person who delivers the papers is often a sheriff's deputy or a professional process server, which can feel intimidating, especially if it happens at home or work. But remember, this is a standard procedure, and you are not alone—millions of Americans are sued for debt each year. The most important thing to understand is that you have rights and options. Ignoring the situation is the one thing you can't afford to do, as it almost guarantees you will lose the case automatically through something called a default judgment. Taking a deep breath and figuring out your next steps is the best way to protect yourself and your finances. This is your chance to tell your side of the story and challenge the lawsuit.

How You'll Receive the Lawsuit Papers

You won't find these documents in your regular mail. Legal service, or "service of process," has strict rules to ensure you actually receive the notice. Most commonly, a sheriff, deputy, or a licensed private process server will deliver the papers to you in person at your home or workplace. If they can't find you, they might be allowed to leave the documents with another adult at your home and mail a second copy. In some states, they may use certified mail with a required signature. No matter how they arrive, these papers are your official notice that a lawsuit has begun. Once you have them in hand, the clock starts ticking on your deadline to respond to the debt lawsuit.

What to Look for in the Documents

The packet of papers you receive will typically contain two key documents: a Summons and a Complaint. The Summons is a formal notice from the court itself, telling you that you've been sued and that you have a limited time to respond. The Complaint is the written legal document from the plaintiff (the company suing you) that explains their claims. Read the Complaint carefully to find out who is suing you—is it the original credit card company or a third-party debt buyer? You'll also see how much money they claim you owe and a brief explanation of why they believe you owe it. These details are critical for preparing your response.

Find Your Response Deadline

Your deadline to respond is the single most important piece of information in the lawsuit papers. It should be clearly stated on the Summons. This deadline is strict and varies by state, but it's usually somewhere between 14 and 30 days from the date you were served. To respond, you must file an Answer with the court. An Answer is your formal, written response to the claims made in the Complaint. If you miss this deadline, the court can issue a default judgment against you without ever hearing your side of the story. This means the debt collector wins automatically, so finding and respecting your deadline is your first priority.

What Happens If You Ignore a Credit Card Lawsuit?

Receiving a lawsuit is stressful, and your first instinct might be to ignore it and hope it goes away. This is the single biggest mistake you can make. When you don't respond, you give the credit card company an automatic win. In fact, an estimated 70-90% of debt collection lawsuits end this way because the person being sued never answers.

Ignoring the lawsuit doesn't make the problem disappear; it makes it much worse. The court assumes you agree with the creditor's claims and will rule against you without ever hearing your side of the story. This ruling, called a default judgment, gives the debt collector powerful legal tools to force you to pay. It takes control out of your hands and can lead to serious financial consequences that affect your income, your property, and your ability to get credit for years to come. Responding is your chance to protect your rights and fight back.

The Risk of a Default Judgment

A default judgment is a binding court order that says you owe the debt. Because you didn't file a response, the judge rules in favor of the credit card company by default. You lose your right to dispute the amount, question whether the debt is yours, or raise any defenses. According to the Consumer Financial Protection Bureau, the court can rule against you without hearing your side if you fail to respond. This judgment is the legal key that allows the creditor to take more aggressive collection actions. It’s critical to file an Answer to prevent this from happening.

Wage Garnishment and Frozen Bank Accounts

Once a creditor has a default judgment, they can ask the court for a writ of garnishment. This order is sent to your employer, who is then legally required to withhold a portion of your wages from each paycheck and send it directly to the creditor. The amount they can take varies by state, but it can be a significant part of your income. A judgment can also lead to a bank levy, where the creditor can freeze your bank accounts and take the funds inside to satisfy the debt. This can happen without warning, leaving you unable to pay your rent, mortgage, or other essential bills.

Property Liens and Long-Term Credit Damage

A default judgment can also result in a property lien. This is a legal claim placed on your property, such as your home or car, which prevents you from selling or refinancing it until the debt is paid. Beyond your physical assets, a judgment causes severe and lasting damage to your credit report. It can stay on your report for up to seven years, making it incredibly difficult to get approved for a mortgage, car loan, or even another credit card. This negative mark can also impact your ability to get a job or rent an apartment, as many employers and landlords check credit history.

Your First Steps After Being Sued

Finding a lawsuit summons on your doorstep is stressful. Your first instinct might be to panic or ignore it, hoping it will go away. But taking a deep breath and creating a plan is the most powerful thing you can do right now. Every year, millions of Americans are sued for debt, and the vast majority—up to 90% in some cases—lose automatically simply because they never respond. This results in a default judgment, which gives the creditor the power to garnish your wages or freeze your bank account.

You can prevent that from happening. By taking a few methodical steps, you can protect your rights and put yourself in the best possible position to fight the lawsuit. It starts with understanding what you’re up against and getting organized. Think of it as a checklist. Your only job right now is to move from one task to the next. This guide will walk you through the four most important first steps: confirming the debt, gathering your documents, calculating your deadline, and avoiding common mistakes that could hurt your case.

Confirm the Debt Is Yours

First things first: make sure the debt is actually yours and the details are correct. When debts are sold from one collection agency to another, information can get lost or mixed up. Carefully read the lawsuit paperwork, called the Complaint, and check the creditor’s name, the original account number, and the amount they claim you owe. Does it match your records? If you don’t recognize the debt or the amount seems wrong, you have the right to challenge it. The company suing you has the legal burden to prove you owe the money. You can formally ask them to provide this proof by sending a request for validation.

Gather Your Documents

Next, it’s time to get organized. Find a folder or a safe place to keep all the paperwork related to this debt and lawsuit. This includes the Summons and Complaint you just received, any previous letters or notices from the debt collector, and any of your own records, like old account statements or proof of payments. Having everything in one place will make it much easier to prepare your official response. Services like LawLaw’s Debt Lawsuit Response Service use a guided questionnaire that walks you through this information, helping you pull the right details from your documents to build a formal Answer to the court.

Calculate Your Deadlines

This step is critical and time-sensitive. The lawsuit papers, specifically the Summons, will tell you exactly how long you have to file a formal response with the court. This deadline is strict. Typically, you’ll have between 14 and 30 days from the day you were served. Mark this date on your calendar immediately. Missing it is the single biggest mistake you can make, as it allows the credit card company to win a default judgment against you automatically. If your deadline is coming up quickly, you need to act fast to prepare and file your Answer.

Avoid These Common Mistakes

The most damaging mistake you can make is ignoring the lawsuit. If you don’t respond by the court’s deadline, the judge can—and likely will—rule against you without ever hearing your side of the story. This is called a default judgment, and it’s how most debt collectors win. Another common mistake is calling the collector in a panic. Avoid making verbal promises or admitting fault on a recorded line, as this can be used against you later. Instead, focus on preparing your formal, written response to the court. This is your official opportunity to defend yourself.

How to Respond to the Lawsuit

Once you’ve taken a deep breath and gathered your paperwork, it’s time to formally respond to the lawsuit. This isn’t as intimidating as it sounds. Responding is your opportunity to tell your side of the story to the court and protect yourself from an automatic loss. The key is to follow the court's rules and meet your deadline. Taking these next steps seriously is the most powerful thing you can do to defend your rights.

File an "Answer" with the Court

Your official response to a lawsuit is a legal document called an "Answer." This isn't a letter or an email; it's a formal document you file with the same court where the lawsuit was started. In the Answer, you go through the credit card company's complaint paragraph by paragraph and either admit or deny their claims. Filing an Answer is how you officially join the case and prevent the debt collector from getting an easy win. According to the Arizona Judicial Branch, this is the required first step to formally respond and state your side of the case.

Use the Right Legal Language and Format

Courts have strict rules about how legal documents should look and what they must contain. Your Answer needs to be formatted correctly, use specific legal language, and include details like the case number and court name. If it’s not done right, the court could reject it. This is where many people get stuck, but you don’t have to figure it out alone. LawLaw’s platform helps you generate the correct legal document by guiding you through a simple questionnaire. We make sure your Answer has the proper formatting and language for your specific court, so you can file with confidence.

Raise Your Defenses

Besides responding to the claims, your Answer is also where you raise any "affirmative defenses." A defense is a legal reason why the credit card company shouldn't win, even if you did owe the money at some point. For example, the debt might be too old for them to collect (past the statute of limitations), you may have already paid it, or the person suing you might not have the right to collect it. You must include these defenses in your initial Answer, or you might lose the chance to use them later. Thinking through these defenses is a critical part of protecting your rights.

Use a Debt Validation Letter

Before you even file your Answer, you have the right to make the debt collector prove the debt is actually yours and that they have the right to sue you for it. You can do this by sending a debt validation letter. This letter formally asks them to provide proof, like the original credit card agreement or a detailed history of the account. This step can sometimes stop a lawsuit in its tracks if the collector doesn't have their paperwork in order. You can use LawLaw’s free Debt Validation Letter Generator to create this document and put the burden of proof back on the collector.

What Are Your Legal Rights in a Debt Lawsuit?

Getting sued can make you feel powerless, but it’s important to remember that you have rights. The legal system has rules in place to protect you from unfair or abusive practices. Understanding these rights is the first step toward building a strong response and protecting your financial future. A debt collector doesn't automatically win just by filing a lawsuit—they have to follow the law and prove their case.

Know Your Protections Under the FDCPA

You are protected by a powerful federal law called the Fair Debt Collection Practices Act (FDCPA). This law sets clear rules for what debt collectors can and cannot do. For example, they can't harass you with constant calls, use obscene language, or call you before 8 a.m. or after 9 p.m. They also can't lie about the amount you owe or threaten you with actions they can't legally take, like having you arrested. Many states have their own consumer protection laws that offer even more security. If a collector violates the FDCPA, you may be able to sue them for damages. Knowing these rules helps you identify improper behavior and stand up for yourself with confidence.

Request Proof That You Owe the Debt

The burden of proof in a debt lawsuit is on the company suing you. It’s their job to prove to the court that the debt is legitimate, the amount is correct, and you are the person who owes it. You have the right to demand they provide this proof. This is often called "debt validation." You can ask for documents like the original signed credit agreement and a complete history of account statements. Don’t just take their word for it. A great first step is to send a formal request for this information using a tool like LawLaw’s free Debt Validation Letter Generator. This forces the collector to show their cards and can sometimes reveal weaknesses in their case early on.

Challenge the Collector's Right to Sue

Beyond proving the debt is real, the collector must also prove they have the legal right to sue you for it. Many debts, especially older credit card accounts, are sold and resold multiple times to different collection agencies. During these sales, essential legal paperwork proving ownership can get lost. By filing a formal "Answer" to the lawsuit, you challenge the collector to produce a clear chain of title showing they legally own your debt. If they can't, the case could be dismissed. Ignoring the lawsuit means you give up this chance, and the court will likely assume the collector's claims are true. LawLaw’s Debt Lawsuit Response service can help you create and file the official court documents needed to make this challenge.

Should You Negotiate or Settle the Debt?

Receiving a lawsuit doesn't automatically mean you're headed for a courtroom battle. In fact, it often opens the door for a serious negotiation. The single most important thing you can do to gain leverage is to formally respond to the lawsuit. Filing an Answer with the court shows the debt collector you won't be an easy default judgment. This simple action preserves your legal rights and immediately puts you in a stronger position, whether you plan to fight the claim or negotiate a resolution. Many creditors would rather settle out of court for a reduced amount than spend more time and money on a legal fight they might not win.

How to Negotiate a Settlement

If you know the debt is valid but can’t afford the full amount, negotiating a settlement is a practical goal. You can offer to pay a portion of the debt in a single lump-sum payment in exchange for the creditor dropping the lawsuit and forgiving the rest. First, figure out what you can realistically afford, then start negotiations with an offer below that amount. The creditor will likely counter, and you can work toward a number that works for both of you. LawLaw’s Premium Plan includes a negotiation strategy guide and settlement letter templates to help you structure your offer. Always get the final agreement in writing before you send any money.

Explore Payment Plan Options

If a lump-sum payment isn’t an option, you may be able to negotiate a payment plan. This allows you to resolve the debt by making smaller, consistent monthly payments over an agreed-upon period. When discussing a payment plan, be honest with yourself about what you can afford each month without fail. Agreeing to a plan you can’t stick to will only put you back in a difficult position. Just like with a lump-sum settlement, it is critical that you get the terms of the payment plan in writing. The document should clearly state the payment amount, due dates, and confirmation that the lawsuit will be dismissed as long as you hold up your end of the deal.

Decide Whether to Negotiate or Fight

Responding to the lawsuit is your best first move, no matter your long-term plan. It forces the debt collector to prove their case, which can be harder than it sounds. They must provide evidence that you owe the debt, that the amount is correct, and that they have the legal right to sue you for it. According to the Federal Trade Commission, simply responding or showing up in court can put you in a better position to settle. By filing an Answer, you challenge them to meet their burden of proof. This pressure alone can sometimes lead to a dismissal or a much more favorable settlement offer, giving you the power to decide your next step from a position of strength.

What Are the Long-Term Effects of a Judgment?

When a credit card company sues you and wins, the court issues something called a judgment. This isn’t just a piece of paper; it’s a powerful legal order that gives the creditor the right to use serious measures to collect the debt from you. This is the outcome you want to avoid, but it’s exactly what happens when a lawsuit is ignored. In fact, a staggering 70% to 90% of debt collection lawsuits end in a “default judgment” simply because the person being sued never filed a response with the court.

A judgment gives the creditor a legal green light to pursue your assets. It doesn't just go away; it can follow you for years, creating significant financial and personal stress. The creditor no longer has to ask you for the money—they can use the legal system to take it. Understanding these consequences is the first step in realizing why responding to the lawsuit is so critical. Filing an Answer with the court is your official way of telling the judge you are participating in the case and preventing the creditor from getting an easy, automatic win. It’s your chance to defend yourself and avoid the severe, long-term problems a judgment can cause.

How a Court Judgment Is Enforced

Once a creditor has a judgment, they can begin collection actions that are far more aggressive than phone calls and letters. The court can grant them the power to take money directly from your income or assets. One of the most common methods is wage garnishment, where your employer is legally required to withhold a portion of your paycheck and send it to your creditor. Another powerful tool is a bank account levy. With a court order, a creditor can freeze your bank accounts and take the funds needed to satisfy the debt. Finally, a creditor can place a lien on your property, like your home or car, which is a legal claim that must be paid before you can sell or refinance it.

How a Judgment Affects Your Credit and Loans

A court judgment doesn't just impact your cash flow; it deals a heavy blow to your financial reputation. A judgment is a public record that will appear on your credit report and can stay there for up to seven years. This negative mark can cause your credit score to drop significantly, making it much harder to build a stable financial future. Lenders, landlords, and even some employers view a judgment as a major red flag, indicating a history of not paying your debts. As the Consumer Financial Protection Bureau explains, this can make it incredibly difficult to get a new loan for a car, a mortgage for a home, or even a new credit card. If you are approved, you’ll likely face much higher interest rates, costing you thousands more over time.

How a Judgment Can Affect Your Job and Housing

The ripple effects of a judgment can extend into your professional life and your ability to secure housing. Some employers run credit checks as part of their background screening process, particularly for roles that involve handling money. A judgment on your record could potentially cost you a job opportunity because it can create a perception of financial instability. Your housing situation can also be at risk. Landlords almost always check the credit history of potential tenants, and a judgment signals that you might struggle to pay rent on time. The consequences, from wage garnishment to property liens, create a cycle of instability that can be difficult to break, affecting the most fundamental parts of your life.

Should You Handle This Yourself or Get Help?

After being served with a lawsuit, one of the first questions you’ll ask is whether you need a lawyer. The answer depends on your comfort level with the legal process and your budget. While hiring a traditional attorney is one path, it’s not the only one. You can also use more affordable tools to help you respond, or you can handle the entire process on your own. Each option has different costs and benefits, so it’s important to understand what you’re signing up for before you commit. Let's walk through the choices so you can find the right fit for your situation.

When to Consider Professional Help

Hiring a lawyer can provide peace of mind. An attorney can offer legal advice, develop a case strategy, and handle all communication with the debt collector’s lawyers. Studies show that people who get legal representation for debt lawsuits often have better outcomes. The main drawback, of course, is the cost. Legal fees can quickly add up, which isn't realistic for many people, especially if you're already dealing with financial stress. If the debt is very large or your case involves complex legal issues, getting a consultation with a lawyer can help you understand your rights and decide on your next steps.

Explore DIY Response Tools

If a lawyer’s retainer is out of reach, you’re not out of options. Legal technology platforms offer a middle ground, giving you the tools to fight back without the high price tag. LawLaw’s Debt Lawsuit Response Service, for example, helps you generate and file the official court document—your Answer—to respond to the lawsuit. Our platform guides you through a simple questionnaire to gather your case details and creates the documents you need. For those who can't afford a lawyer, the FTC also suggests looking for free legal aid clinics or consumer advocacy groups that may be able to help you find low-cost legal assistance in your area.

Compare the Costs of Your Options

The most expensive choice is doing nothing at all. If you ignore the lawsuit, the court will likely issue a default judgment against you, allowing the collector to garnish your wages or freeze your bank account. Responding is always the better move. It forces the debt collector to prove you actually owe the money. Your other options have different costs: a lawyer is expensive, and handling it completely alone can cost you a lot of time and stress, with a high risk of making a critical mistake. An affordable tool like LawLaw offers a clear, one-time fee to help you respond correctly and confidently, avoiding a default judgment without the financial strain of hiring an attorney.

Related Articles

• How to Respond to Credit Card Lawsuit | LawLaw Guide
• Getting Sued by a Credit Card Company? What to Do Next
• Credit Card Company Lawsuit Guide | LawLaw

Frequently Asked Questions

What's the worst that can happen if I just ignore the lawsuit? Ignoring the lawsuit is the most damaging thing you can do. If you don't file a formal response with the court by the deadline, the company suing you will almost certainly win automatically. The court will issue a "default judgment" against you, which is a legal order stating you owe the full amount. This gives the creditor powerful tools to collect the money, such as garnishing your wages, freezing your bank accounts, or even placing a lien on your property.

Is it possible to fight a credit card lawsuit and win? Yes, it is absolutely possible. Winning doesn't always mean a dramatic courtroom victory. It can mean getting the case dismissed because the debt collector can't prove they own the debt or because the debt is too old. It can also mean using your response as leverage to negotiate a much lower settlement amount. The key is that you can't achieve any of these positive outcomes unless you formally respond to the lawsuit first.

How much does it cost to respond to a lawsuit? The cost varies depending on the path you choose. Hiring a traditional lawyer is the most expensive option, often costing hundreds or thousands of dollars. Handling it completely on your own is free, but it's risky because you could make a procedural mistake that costs you the case. Using a legal technology service like LawLaw is an affordable middle ground, offering a clear, one-time fee to help you generate and file the correct court documents without the high cost of an attorney.

I filed my Answer with the court. What happens next? Filing your Answer officially puts you in the game and prevents a default judgment. After that, the case enters a phase called "discovery," where both sides can request information from each other. However, most debt collection lawsuits never actually go to a full trial. Often, after seeing you've filed a formal response, the debt collector will become much more willing to negotiate a settlement out of court, as they now know they have to actually prove their case.

Should I try to settle the debt before or after I respond to the lawsuit? It's almost always better to file your official Answer with the court before you start serious negotiations. Responding to the lawsuit shows the creditor that you are taking this seriously and won't be an easy win. This action immediately gives you leverage. Once they know they have to spend time and money to fight you in court, they are often far more motivated to agree to a reasonable settlement.