How To Defend A Credit Card Lawsuit Even If You Owe the Money

by Jay Fleischman, Esq.

August 29, 2012

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If you’re on the wrong end of a credit card lawsuit, you’re faced with the prospect of a judgment against you.  If you’re smart, you’ve got powerful weapons you can use.

Lots of times you’re served with a lawsuit for a credit card debt and think to yourself, I owe the money.  Guess I’ve got no defenses.  You’re wrong.  In fact, there are a number of actions you should take immediately.

File An Answer

If you don’t file an Answer to a credit card lawsuit, the creditor is going to be able to take a judgment against you.  The judgment is what allows a creditor to take actions such as wage garnishment, levy against your bank account, or file a lien against your property.

Filing an Answer, however, prevents that from happening without the judge getting involved.  Many creditors file dozens or even hundreds of lawsuits each week in the hope that most of them go to default judgment.  Don’t be a statistic.

Make No Excuses

Filing an Answer that amounts to an excuse for why you can’t pay is not a defense to the lawsuit – it’s an admission that you owe the money to the company making the claim against you – in the amount they’re claiming you owe.

Rather than making an excuse for nonpayment, remember that a Complaint in a credit card lawsuit is nothing more than a list of allegations – not proof.  Don’t fall into the trap of agreeing to something without proof.

Demand Proof Of Ownership

Whether you think you owe the money or not, make the company suing you prove prove you owe the money to them. The original account may have been transferred to different debt collectors prior to the credit card lawsuit being filed against you.

These accounts are bought and sold repeatedly, which sometimes means a collector has no proof that they bought your account.  Or whether they sold it again.  Or … well … anything resembling proof.  Make them prove they own the debt before agreeing to anything.

Make Sure It’s Legally Collectible

Sometimes the credit card lawsuit is filed after the statute of limitations has passed. The statute of limitations is based on the state law that controls the original credit card agreement, so you need to take a look at that.

Filing a credit card lawsuit when the time has run out is a violation of the FDCPA. Depending on the state you live in, and the quality of the attorneys available to work on your case, very good damages can be awarded for violations of the FDCPA and defending yourself against lawsuits.

Check The Balance

The collector claims you owe a certain amount of money.  You know you owe something – but do you owe what they say you owe?

The amount claimed in a credit card lawsuit often includes interest, bank fees, collection fees, and other charges.  Without an accounting, you can’t be sure the amount is correct.  Demand an accounting of every penny claimed before you agree to pay a dime.

Remember, Knowledge Is Power

Being sued isn’t fun, but that doesn’t mean you get license to forget logic.  Demand proof, stand up for your rights and you’ll get a better result overall.

Image credit: mfhiatt

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

Last modified: September 7, 2012