9 Steps to Take When You Are Sued By a Credit Card Company or Collection Company
Updated: Dec 20, 2019
1. Identify who is suing you. Look for “Plaintiff”
If you are being sued by a credit card company or bank, the name of the company will be listed as the “Plaintiff.” Did you ever have an account with that company? If it sounds familiar, keep on reading. If you’ve never heard of the name of the plaintiff, it could be because the original creditor sold your debt to a different company. Review the complaint that you received to see if the document explains how the company who is suing you received authority to collect money from you.
2. Note the name of the law firm representing the Plaintiff
Now that the collection process has proceeded to a lawsuit, you will be communicating directly with the lawyers who are representing the credit card company. No longer will you be speaking with the creditor themselves.
3. Write down the date, time, and how you got the lawsuit papers
There is a limited amount of time that you, the defendant, has to respond to the lawsuit after you have been served with a copy of the summons and complaint. It is better to know for sure when your clock starts running than to have to panic and stress about an estimate of a 30 day mark.
4. Organize any documents you have
Go through your files, bank account records, old mail and email folders for any information you have regarding this particular account. Often times big banks and credit card companies lose documents or sue on old accounts and just hope that you don’t have any information to disprove their claim. If someone other than the original creditor is suing you, it’s likely that they do not have all of the documents needed to prove that you owe them money. The more documents you have tracking your activity, the better.
5. Consult with a skilled Debt Relief Attorney
While you don’t need to have a lawyer represent you in court to defend this lawsuit, it is certainly in your best interest. For starters, the credit card company and the banks all have lawyers representing them. Even if you don’t hire an attorney or decide to defend yourself pro per (by yourself without legal representation), it is still worth giving an experienced Debt Relief Attorney a call in seeing how to best strategize your case to move forward. An attorney will also tell you how big of an impact a default judgment entered against you will have and how long you have to file the necessary documents with the court.
6. Respond to the lawsuit or debt claim
The single biggest mistake a person can do when they have been sued by a credit card company, bank, or collection agency is to ignore it. You may think that even if you owe the debt, you can’t pay it so it is best to ignore it. This is wrong!!! You can always negotiate a settlement, even after a lawsuit has been filed, and put yourself on a payment plan to eradicate your debt.
If you ignore the lawsuit altogether, you give the creditor the right to enter a default judgment against you and from there they can freeze your bank account, garnish your wages, place a lien on your property, or worse, depending on your state laws. Not to mention, the collector/creditor may also be able to tack on attorney’s fees, interest, court costs, and late fees to double or even triple your balance.
You typically have 20-30 days from the date on the notice. Pay attention!
7. Challenge the company’s legal right to sue
One way to challenge the debt lawsuit is to challenge the creditor’s right to file the lawsuit. The party filing the lawsuit has the burden to prove that you owe them money. If the amount they are suing you for is not accurate, make them prove it. If the debt is more than 4 years old (in California), make them prove their claim. If you already settled this account or had filed for bankruptcy and this debt had been discharged, challenge them!
A plaintiff must provide:
-a credit agreement signed by you
-documentation of the chain of custody of all paperwork to prove that all the information is accurate and came from the original creditor
If the plaintiff/creditor cannot provide this documentation, it is possible the judge will dismiss the case altogether.
8. Point to the Statute of Limitations
In California there is a 4 year statute of limits to sue for debt collection. This means that if it has been at minimum 4 years since you were last active on this account. “Active” can include, the last payment you made, the last time you withdrew funds from the account or last purchase you made on the credit card. You can also check a guide of each state’s statute of limitations to get a better understanding of your timeline. https://www.credit.com/debt/statutes-of-limitations/
9. File a Countersuit if the Creditor Overstepped Regulations
The Fair Debt Collection Practices Act sets the rules from which collectors are allowed to collect from you. These are the 10 things that creditors/collectors ARE NOT allowed to do. If any of the following has happened to you, contact a debt relief attorney immediately!
1. Ask you to pay more than you owe:
A debt collector cannot misrepresent the amount you owe. [15 USC 1692e] § 807(2)(a)
2. Ask you to pay interest, fees, or expenses that are not allowed by law:
Debt collectors cannot add any extra fees that your original creditor or loan agreement doesn’t allow. [15 USC 1692f] § 808(1)
3. Call repeatedly or continuously:
Repeat calls are deemed “harassment” according to the FDCPA [15 USC 1692d] § 806(5)
4. Use obscene, profane, or abusive language:
This type of language is deemed “harassment” [15 USC 1692d] § 806(2)
5. Call before 8:00 am or after 9:00 pm:
Calls during these times are considered “harassment” [15 USC 1692c] § 805(a)(1)
6. Call at times the collector knew or should know are inconvenient:
This is considered “harassment” [15 USC 1692c] § 805(a)(1)
7. Use or threaten to use violence if you don’t pay the debt:
Seems obvious but—Collectors cannot threaten violence against you. [15 USC 1692d] § 806(1)
8. Threaten action they cannot or will not take:
Collectors can’t threaten to sue or file charges against you, garnish wages, cause you to lose your job, take your property, or ruin your credit when the creditor cannot or does not actually intend to take action. [15 USC 1692e] § 807(5)
9. Illegally inform a third party about your alleged debt:
Unless otherwise expressly permitted, collectors are not allowed to inform anyone else about your debt, with limited exceptions. [15 USC 1692c] § 805(b)
10. Contact you at work knowing your employer doesn’t approve:
A collector is not allowed to contact you at work if you have told them that your employer doesn’t approve. [15 USC 1692c] § 805(a)(3)