What Happens When You Get Sued by a Credit Card Company

A lawsuit is designed to make you feel powerless, but you have more rights than you think. The company suing you has the burden of proof—they have to convince a judge that you owe the money, the amount is correct, and they have the legal right to sue you. This is often harder for them than you’d expect. Understanding what happens when you get sued by a credit card company is about learning how to use your rights as a shield. This isn't just about owing money; it's about a legal process you can participate in. We’ll show you how to challenge the debt, question the collector’s claims, and make an informed decision.

Key Takeaways

• File a Response Before the Deadline: Ignoring a lawsuit is the worst mistake you can make, as it leads to an automatic loss called a default judgment. You typically have only 14 to 30 days to file an official Answer with the court to protect your rights.
• Challenge the Collector's Claims: The company suing you must prove their case. You can fight back by demanding proof of the debt, questioning the amount they claim you owe, or arguing that the debt is too old to be collected.
• Get Help Without High Legal Fees: You don't have to face this alone or hire an expensive lawyer. Affordable services like LawLaw can help you create and file the correct legal documents, ensuring your response is handled correctly and on time.

Why Am I Being Sued by a Credit Card Company?

Getting a lawsuit notice from a credit card company can feel like a punch to the gut. It’s stressful, confusing, and it’s easy to imagine the worst-case scenario. The first thing to remember is that this is a civil case, not a criminal one. You aren’t going to jail over credit card debt. A lawsuit is simply the company’s final tool to legally collect the money they believe you owe. Understanding why they’ve taken this step is the first move toward taking control of the situation. Usually, it comes down to a few key reasons.

The role of unpaid debt and missed payments

This is the most straightforward reason for a lawsuit. When you miss payments, your account becomes delinquent. The credit card company or a debt collector who bought your debt will try to contact you to get you to pay. If those attempts fail over several months, they may decide to take legal action to get a court judgment against you. This judgment is a legal order that confirms you owe the debt, giving them more power to collect it. It’s important to know that even after a lawsuit is filed, you still have options. You can often negotiate a settlement to pay a smaller amount and have the case dismissed before it ever goes to trial.

What it means to default on a payment agreement

Sometimes, a lawsuit happens even when you’ve tried to work things out. You might have spoken with the creditor and agreed to a payment plan to catch up on what you owe. But if you miss payments on that new agreement, you "default" on it. From the creditor's perspective, this is a broken promise. Defaulting on a payment plan can accelerate their decision to sue because it signals that informal arrangements aren't working. They see a lawsuit as the only remaining path to recover the debt. Each payment agreement has different terms, so a single missed payment could be enough to trigger legal action.

How repeatedly exceeding your credit limit can lead to a lawsuit

While unpaid bills are the direct cause of a lawsuit, other behaviors can make a creditor see you as a higher risk. Constantly going over your credit limit is one of them. This action contributes to the total amount you owe and can damage your credit score. When a credit card company sees a pattern of exceeding the limit, they may believe you are unable to manage the debt responsibly. This can prompt them to take legal action more quickly once payments are missed, as they want to recover their money before the situation gets worse. It’s another piece of the puzzle that can lead to receiving that dreaded summons in the mail.

You've Been Sued. Here's What to Do First.

Receiving a lawsuit can feel overwhelming, but you have options. The key is to act quickly and strategically. Taking a few simple steps right away can protect your rights and put you in a much stronger position. Think of this as your immediate action plan to get control of the situation.

Rule #1: Don't ignore the summons

This is the most important rule. When you get sued, you receive official court papers called a summons and a complaint. Ignoring them won't make the problem disappear; it actually makes it much worse. If you don't respond, the court can issue a default judgment against you. This means the debt collector automatically wins. As one legal expert puts it, "If you don't answer or respond to the case and a judgment is entered against you, the argument is over – you owe the debt." A default judgment can lead to serious consequences like wage garnishment or a frozen bank account. Responding is your chance to tell your side of the story.

Find your deadline to respond

Your summons will state a deadline for you to file an official response with the court. This is not a suggestion—it’s a strict deadline that typically ranges from 14 to 30 days, depending on your state. Missing it has serious consequences. Once the deadline passes, your "opportunities for participating and disputing the lawsuit progressively diminish." You need to find this date as soon as you open the documents. Circle it, write it on your calendar, and set a reminder. Every other step you take will revolve around meeting this critical deadline. This is your window of opportunity to fight back.

Gather your documents

Before you can decide how to respond, you need to get organized. Start by collecting every piece of paper related to the debt. This includes the original credit card agreement, past billing statements, and any letters or emails you've received from the debt collector. The Consumer Financial Protection Bureau advises that you should first confirm whether you owe the debt. These documents are your evidence. They can help you spot errors, question the amount owed, or even challenge the collector’s right to sue you in the first place. A great first step is to use a Debt Validation Letter Generator to formally ask the collector to prove you owe the money.

The High Cost of Ignoring a Lawsuit

When a thick envelope with a court summons arrives, the first instinct for many is to push it aside. It’s stressful, scary, and feels like a problem for another day. But when it comes to a lawsuit, ignoring the problem is the one thing you can’t afford to do. It doesn’t make the lawsuit disappear; it just takes away your power to fight back.

Failing to respond gives the credit card company an automatic win and opens the door to serious financial consequences that can affect you for years. You lose the chance to question the debt, point out errors, or negotiate a better outcome. Taking action is your only defense. Understanding what’s at stake is the first step toward protecting your finances and your future.

Facing a default judgment

Think of a lawsuit as a conversation with the court. If you don’t show up to participate, the judge only hears one side of the story—the creditor’s. When that happens, the court will likely issue a default judgment against you. This is a legally binding court order that says you owe the debt, no questions asked.

As one legal resource puts it, "If you don't answer or respond to the case and a judgment is entered against you, the argument is over – you owe the debt." A default judgment effectively ends your ability to dispute the amount, challenge the validity of the debt, or present any defenses you might have. It’s the legal equivalent of forfeiting the game before it even starts. You can learn more about the process in our guide to debt collection basics.

Risking wage garnishment and frozen bank accounts

Once a creditor has a default judgment, they have powerful legal tools to collect the money from you. They don’t have to just send letters anymore; they can force you to pay. Two of the most common methods are wage garnishment and bank account freezes.

With wage garnishment, the court orders your employer to take a portion of your earnings from each paycheck and send it directly to the creditor. Suddenly, your income is significantly lower. A bank account freeze, or levy, allows the creditor to seize the funds directly from your checking or savings account without warning. Both actions can make it incredibly difficult to pay your rent, buy groceries, or manage your daily expenses.

Dealing with long-term credit damage

A lawsuit from a credit card company can do lasting harm to your financial reputation. The judgment itself can appear on your credit report, acting as a major red flag to any future lenders. This isn’t just about a few missed payments anymore; it’s a public record of a court order against you.

This negative mark can tank your credit score for up to seven years, making it much harder to get approved for a mortgage, a car loan, or even a new credit card. Landlords and even some employers check credit reports, so a judgment could impact where you live and work. Rebuilding your credit is already a challenge, and a judgment makes that process significantly steeper.

How Long Do I Have to Respond?

When you’re served with a lawsuit, the clock starts ticking immediately. This is not a situation where you can wait and see what happens. You have a firm deadline to file a formal response with the court, and missing it has serious consequences. Think of this deadline as the single most important piece of information you need to find right now. It dictates your next steps and can be the difference between protecting your finances and facing severe penalties.

Generally, you have between 14 and 30 days to respond, but this window can be shorter or longer depending on where you live. The first step is to find that specific date on your court papers. Ignoring it is the worst thing you can do, as it gives the debt collector an automatic win. They can then get a default judgment against you, which is a court order that allows them to take more aggressive collection actions. This could mean having your wages garnished directly from your paycheck or your bank accounts frozen without warning. Finding and meeting your deadline is your first line of defense. It shows the court you’re taking this seriously and preserves your right to challenge the lawsuit and tell your side of the story.

Deadlines vary by state

The exact amount of time you have to respond isn't a national standard; it’s set by state and local court rules. A deadline in Texas might be different from one in California. This variation is a common trip-up for people handling a lawsuit on their own. The rules can also change based on the specific court handling your case (e.g., small claims vs. civil court) and how you were served the papers. It’s crucial to understand that the timeline is strict. The court won’t give you a pass for not knowing your local rules. This is why carefully reading your documents is so important—the answer is usually right there.

How to read your summons for key dates

The good news is that you don’t have to guess your deadline. The official court document you received, called a Summons, will tell you exactly how long you have to file your Answer. Look for a sentence that says something like, "You have X days to file a response" or "An answer must be filed within X days of receiving this summons." The Consumer Financial Protection Bureau advises that you must respond by the date specified in the court papers. Read every page carefully. Once you find the deadline, mark it on your calendar immediately. If you’re feeling overwhelmed, LawLaw can help you respond to a debt lawsuit and ensure all your paperwork is filed correctly and on time.

Your Options for Fighting Back

Getting a lawsuit notice is scary, but it’s not a final verdict. You have rights and several ways to challenge the claims against you. The company suing you has the burden of proof—they have to show the court that you owe the money. By filing a formal Answer to the lawsuit, you can present your side of the story and raise defenses that could get the case dismissed or give you leverage for a better settlement. Let's walk through some of the most common and effective strategies.

Demand proof of the debt

The first thing to remember is that the burden of proof is on the debt collector, not you. They must prove to the court that the debt is yours and the amount is accurate. It's not uncommon for mistakes to happen, from cases of mistaken identity to simple clerical errors. You have the right to demand proof that you owe the debt. This includes asking for the original signed agreement and a complete history of the account. Forcing them to produce this paperwork can sometimes stop a lawsuit in its tracks, especially if they can't find it. You can use a tool like LawLaw’s free Debt Validation Letter Generator to formally request this information.

Challenge an old debt (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 an unpaid debt. If the debt is old enough, it may be past this legal deadline. This is a powerful defense that can get the case thrown out completely. The clock usually starts ticking from your last payment date, but the exact time frame varies significantly depending on your state and the type of debt. Don't assume an old debt is uncollectible, but if it's been several years, it's absolutely worth investigating whether the statute of limitations has expired.

Question their right to sue

Often, the company suing you isn't your original credit card company. It’s likely a third-party debt buyer who purchased your old debt for pennies on the dollar. If that’s the case, you can and should question whether they have the legal right to sue you. These companies must prove they have "standing," which means they need to show a clear paper trail proving they legally own your specific debt. This chain of ownership documents is frequently incomplete or missing. Challenging their right to sue forces them to produce these records, and if they can't, the court may dismiss the case.

Dispute the amount they claim you owe

Even if you agree that you owe the debt, the amount listed in the lawsuit might be wrong. Debt collectors often add extra interest, late fees, and collection costs that can inflate the original balance. Carefully review the amount they claim you owe. If it seems too high, you have the right to dispute it. In your official Answer to the lawsuit, you can state that you disagree with the total and require the plaintiff to provide a detailed breakdown of how they calculated it. You can negotiate a settlement based on what you actually owe. LawLaw can help you prepare and file your Answer to formally challenge the amount.

Settle or Fight? How to Decide.

Once you’ve been served with a lawsuit, you’ll face a critical decision: should you try to settle the debt with the collector, or should you fight the lawsuit in court? There’s no single right answer—the best path depends on your specific situation, the details of the debt, and what you’re hoping to achieve. This isn’t about winning or losing; it’s about choosing the strategy that best protects your financial well-being and gives you a sense of control. Many people feel pressured to make a choice immediately, but taking a moment to understand your options is the most powerful thing you can do.

Thinking through this choice is a crucial step. Settling can offer a quick resolution and potentially save you money, while fighting back can be the right move if you have strong reasons to believe the lawsuit is flawed or incorrect. For example, you might not recognize the debt, or the amount could be wrong. On the other hand, if the debt is valid and you simply want to resolve it for the lowest possible amount, settlement might be your goal. Both paths are valid, and both require you to take action by responding to the lawsuit first. Let’s break down the factors to consider for each option so you can decide with confidence.

The pros of settling out of court

Settling a debt means you and the creditor agree on an amount to resolve the lawsuit, which is then dismissed. This is often a practical and powerful choice. The biggest advantage is that it puts you in the driver's seat. Instead of leaving the final decision to a judge, you get to have a say in the outcome.

Settling can also save you time and stress by avoiding a drawn-out court process. You might negotiate to pay less than the original amount claimed, especially if you can offer a lump-sum payment. This approach provides a clear end to the legal pressure and lets you move forward without the uncertainty of a trial hanging over your head.

When it makes sense to fight

Receiving a lawsuit doesn't automatically mean you have to pay. One of the biggest myths is that a lawsuit from a debt collector is game over. You have the right to challenge the lawsuit, and sometimes, fighting back is the smartest move you can make. This is especially true if you have defenses available to you.

For example, does the debt collector actually have proof that you owe the money? Is the amount they’re claiming accurate? Has the statute of limitations—the legal time limit for suing on a debt—expired? If you suspect any of these things, filing an official Answer to the lawsuit forces the collector to prove their case. Ignoring the lawsuit is the worst thing you can do, as it leads to a default judgment. Fighting back protects your rights.

How to negotiate a fair settlement

If you decide settling is the right path, your goal is to reach an agreement that you can realistically afford. The first step is to confirm that you owe the debt and that the amount is correct. From there, figure out what you can genuinely offer, whether it’s a single payment or a monthly plan.

When you make an offer, be realistic. A creditor is more likely to accept a settlement if it’s more than they would get after the costs of garnishing your wages. Start the conversation with a clear proposal. If you need support, LawLaw’s Premium Plan includes access to a negotiation module and a strategy call with a legal specialist to help you prepare for these discussions and draft a settlement offer.

What to Expect in the Court Process

The thought of going to court can be intimidating, but knowing what to expect makes the entire process feel more manageable. A lawsuit isn't a single, dramatic event; it's a series of steps, each with its own purpose. From filing your initial response to potentially appearing before a judge, the process follows a structured path. Understanding these stages helps you prepare and protect your rights.

The first and most critical step is filing your official response to the lawsuit. After that, both sides enter a phase called "discovery," where you exchange information and evidence. Finally, if the case doesn't settle, you'll have a court date where a judge hears both sides. Let's break down what each of these stages involves so you can feel more confident about what lies ahead.

How to file your official answer

When you receive a summons and complaint, you must file an official "Answer" with the court. This is your formal, written response to the collector's claims. In this document, you need to go through the complaint paragraph by paragraph and state whether you agree with, disagree with, or don't have enough information to respond to each point. This is also where you can raise any defenses you might have, like if the debt is past the statute of limitations. Failing to file an Answer on time can lead to a default judgment, meaning you automatically lose the case. LawLaw makes it easy to respond to a debt lawsuit correctly and on time, ensuring your side of the story is heard by the court.

The discovery phase: Exchanging information

After you file your Answer, the lawsuit enters a stage called discovery. Think of this as the evidence-gathering phase. Both you and the debt collector have the right to request information from each other to build your cases. This process can include a few different tools. You might receive "interrogatories," which are written questions you must answer under oath, or "requests for documents," where they ask for specific paperwork related to the debt. The discovery phase is crucial because it helps both sides understand the strengths and weaknesses of their arguments. This exchange of information often leads to a settlement before ever having to see a judge.

What happens on your court date

If your case doesn't settle, you will eventually have a court date. On this day, you and the debt collector (or their attorney) will present your cases to a judge. This is your opportunity to share your evidence, explain your defenses, and make your arguments in person. The debt collector will do the same. It is absolutely critical that you show up for your court date. If you don't appear, the judge will almost certainly issue a default judgment against you, which means you lose automatically. Being present and prepared shows the court you are taking the matter seriously and gives you the chance to win the case.

Where to Find Help

Facing a lawsuit can feel isolating, but you don’t have to go through it alone. From traditional legal help to modern, tech-driven services, you have options. The right choice depends on your case, your budget, and how involved you want to be. Understanding these options is the first step toward taking control and finding a path forward that works for you.

When to hire an attorney

If your case feels particularly complicated or you simply want an expert to handle everything, hiring an attorney is a solid choice. It is often a good idea to consult with an attorney who specializes in consumer law. They can provide personalized legal advice, develop a strategy for your specific situation, and represent you in court. This is the most hands-off approach, but it’s also the most expensive, often requiring a retainer and charging hundreds of dollars per hour. For many, the high cost can be a significant barrier.

Using a document preparation service

For those who need guidance without the high price tag of a lawyer, a document preparation service is an excellent middle ground. These services help you prepare the necessary legal forms to respond to the lawsuit. While they can't offer legal advice or represent you in court, they ensure your paperwork is correctly formatted. Platforms like LawLaw make it easy to respond to a debt lawsuit by generating attorney-reviewed documents from a simple questionnaire. We even handle filing the documents with the court, simplifying a process that can be confusing and stressful.

Understanding the potential costs

When deciding how to proceed, it’s important to weigh the costs against the potential outcomes. An attorney might cost thousands, while a service like LawLaw offers transparent, one-time fees starting at just $70. While it’s tempting to save money by doing nothing, that’s the most expensive mistake you can make. Ignoring the lawsuit leads to a default judgment, which allows the collector to garnish your wages or freeze your bank account. Investing a small amount now to file a proper response can save you from a much larger financial headache down the road.

Related Articles

• Credit Card Company Lawsuit Guide
• Getting Sued by a Credit Card Company? What to Do Next
• Sued by a Credit Card Company? Steps to Take & Legal Tips

Frequently Asked Questions

What's the absolute worst that can happen if I just ignore the lawsuit? Ignoring the lawsuit is the most costly mistake you can make. If you don't respond by the deadline, the court will likely issue a default judgment against you, which means the debt collector automatically wins. With that court order, they can legally take money directly from your paycheck through wage garnishment or freeze the funds in your bank account. The problem doesn't go away; it just gets much more serious.

Can I really handle this myself without hiring an expensive lawyer? Yes, you absolutely have options that don't involve the high cost of a traditional attorney. While a lawyer is the right choice for some complex situations, many people can successfully respond to a lawsuit using services designed to help. Platforms like LawLaw provide the tools to create and file the correct legal documents, ensuring your response is handled properly and on time. This gives you a powerful way to stand up for your rights without breaking the bank.

Is it too late to negotiate a settlement once a lawsuit has been filed? It's definitely not too late. In fact, filing a formal Answer to the lawsuit can put you in a much stronger position to negotiate. It signals to the debt collector that you are taking this seriously and won't be an easy win for them. Many collectors prefer to settle a case rather than spend more time and money on a court battle, so the opportunity to reach an agreement often remains open right up until the court date.

What if I'm sure this isn't my debt or the amount is completely wrong? If you believe there's a mistake, that's a powerful reason to formally respond to the lawsuit. In your official Answer, you can state that you dispute the debt or the amount claimed. This action forces the collector to prove their case to the court. They must provide documentation showing that you are the correct person and that the amount they are suing for is accurate. If they can't produce that proof, the case could be dismissed.

How much does it actually cost to get help responding to the lawsuit? The cost depends entirely on the path you take. Hiring a private attorney can run into thousands of dollars. On the other hand, services like LawLaw are designed to be an affordable alternative. We offer clear, one-time pricing for plans that help you generate and file your official court documents. This approach gives you a predictable cost so you can protect your finances without the stress of surprise legal bills.