Is It Worth It to Defend a Credit Card Lawsuit?

Showing a little moxie often pays off when dealing with creditors

A man cutting up credit cards

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You thought that old credit card balance had dried up. Perhaps you hadn't heard from any debt collectors on it for some time. Then, bam! In the mail comes a "Summons" and a copy of a lawsuit filed by some company you've never heard of alleging that you owe an inflated amount on an account you almost forgot you had.

It can be hard to know what to do, but you do have choices. Let's look at what you can do to take care of this old debt, or maybe even make it go away. 

Ignore It 

Do you owe the money? Why not just let the collector take a judgment? After all, you figured you probably hadn't seen the end of it. 

Frankly, this may be true, but it may not be the best idea. It's better to try to avoid a judgment.

Offer to Settle

Not a bad choice. Almost always the collector will indicate a willingness to knock something off the balance in return for a quick settlement and withdrawal of the suit. But how much is enough? How low will they go? 

Represent Yourself in the Lawsuit 

Depending on the size of the account, credit card lawsuits are often filed in small claims or justice of the peace courts. These courts understand that many individuals can't or won't hire a lawyer, and they work hard to simplify the process by easing paperwork and procedural requirements.

But remember, the creditor suing you is being represented by a lawyer (a corporation is not allowed to represent itself in court, even in small claims court.) Collection lawyers are aggressive, do this every day, and know all the tricks. Are you sure you want to go it alone?

Hire an Attorney to Represent You

But isn't this expensive? It depends. Lawyers who defend lawsuits for consumers usually charge either a flat fee or an hourly fee. Unless the lawyer is willing to take the case for less than you would likely pay out in a settlement with the creditor, it may not make economic sense. But, if the lawyer could make the lawsuit go away for a nominal amount, would that be worth it? 

Lawsuits filed by bill collectors can often be defended based on two fundamental facts. 

  1. The debt is too old to get a judgment. In every state, there is law or set of laws called the Statute of Limitations. The Statute says that if someone files suit against you on an old debt (usually three to six years, depending on the state and type), they can't get a judgment against you. The trick is that you have to bring that to the court's attention. It's called bringing an affirmative defense. It is possible that a judge may notice independently that the debt is too old, but often the lawsuit papers don't set out how old the debt is (see "B" below), so the judge won't know unless you, the defendant, tells her. You normally do that by filing an answer, or a response to the suit, and setting out your defenses in the answer.
  2. The debt collector can't prove that you owe the money. Accounts are sold time and again by debt collectors to other debt collectors. Many times, the paperwork that forms the basis of the lawsuit -- your cardholder agreement, your application, your payment history -- isn't forwarded with the account. If you don't defend your suit, a bill collector often doesn't have to prove anything. The judge will take the allegations contained in the lawsuit as fact and will enter a "default judgment.". If you defend the suit, the bill collector will have to prove that you actually agreed to certain terms, that you borrowed the money, and what your balance is. It may be difficult for the bill collection to access that paperwork, and without the proper paperwork, the bill collector won't be able to prove all the elements of its suit against you.

The Bottom Line

If you defend the suit, there's a pretty fair chance the bill collector can't win it, or will withdraw it, or will negotiate a far lower settlement. 

Since many debt defense lawyers offer an initial consultation at no charge, you have nothing to lose by making an appointment to visit with one. 

Here are three good places to find a lawyer who will help you defend a consumer debt: :