Credit card debt is one of the biggest issues facing Americans today. Credit card debt exceeded $413 billion in 2020 with no signs of slowing down. 

As credit card debt continues to rise, especially as more people shop virtually than ever before, the number of people faced with a credit card debt lawsuit will also grow exponentially.

Ignoring the problem will not make it suddenly disappear. In fact, as debt rises people are more prone to only pay the interest balance on their credit card statements. Which means the likelihood of one day seeing that balance reach zero may never come. 

The result?

Oftentimes a debt lawsuit is launched against the consumer throwing their entire financial and emotional world into chaos. 

“Before you know it, your credit card company may hand your account to a third-party collection agency who will have zero tolerance for late fees or non-payment,” explains Chantel Grant, a Senior Partner and debt lawsuit specialist at the GM Law Firm in Boca Raton, Florida. “Once the debt lawsuit has been filed, the consumer has no choice but to hire an attorney and fight back before his or her financial status and credit is ruined forever.”

Your Credit Card Company Has Sued You…Now What?

First, the food news. You will not go to jail over a credit card debt dispute.

Now, the bad news. If you don’t defend yourself and proactively strategize a way out of the problem, you could end up bankrupt with your credit score forever destroyed. Without a strong defense, you may never again be able to buy a house or car or interact with any purchase where good credit is necessary.

So, where to begin when a credit card company sues you?

The first step to negotiating with a credit card company or collection agency is having proper legal counsel on your side. Having an expert credit card lawsuit attorney in your corner puts you in a position of power instead of weakness. 

There are many federal regulations in place to protect a debtor’s rights. 

The Fair Credit Reporting Act (FCRA) is a federal law that helps ensure the accuracy, fairness and privacy of the information contained in the files of certain consumer reporting agencies that includes credit bureaus. 

In addition, there are very specific statutes of limitations laws that can be used in your favor as to the timing of filing of the legal process. These statutes differ from state to state, yet another reason why a debt legal firm should be consulted to understand the nuances of your situation.

Generally speaking, the consumer has 30 days to respond to the issuance of a debt lawsuit. Again, ignoring this decree or waiting until the last minute to respond will only decrease your ability to obtain a settlement in your favor. 

Without a proper response, the court could order a garnishment of wages or bank account order. 

“You want to put yourself in a position of offense and not defense,” advises GM Law Firm’s Chantel Grant, Esq. “There are many ways to settle debt lawsuits without permanent harm to your credit profile.”

Responding To The Debt Lawsuit

To begin, verify the debt you’re being accused of owing. It may not always be what it seems. There could be hidden penalties for late fees that you should not be on the hook for. Errors and even fraud can be hidden in the fine print. Those details can be dissected and easily eliminated which will begin to show a pattern of negligence on the part of the debt collectors. 

That’s where a legal team can help in initiating the process of discovery. Another helpful clause in the Fair Credit Reporting Act allows consumers to request proof of the debt with all its inherent terms and conditions. Without these documents, the lawsuit could be immediately dismissed. 

There might even be a point where you could counter sue and win remunerations and monetary damages to help whittle down the actual debt. 

Now, once the debt is verified, there are several ways to proceed including requesting a settlement. 

You or your counsel can contact the credit card company and negotiate a way to settle the debt before it becomes a lawsuit. The amount can be based on what you are realistically able to pay and over what period of time. Thus, the settlement could be a one-time larger payment or an installment program. 

It’s important to note that a settlement is probably your last line of defense before a lawsuit could be filed. Thus it’s vitally important that whatever you agree upon is a plan you can stick to and not default on any aspect of it.

You’ve probably seen ads for debt settlement companies that promise assurance that they can solve your debt situation. It’s important to note that these companies often charge high rates to be your negotiator with no promises that they will actually be able to settle the case.

Most consumer advocacy attorney firms like the GM Law Firm have the experience to understand exactly how and where a negotiation could go. They can play out the different options your particular predicament is facing and help you make a determination if the settlement is worthwhile or if there’s a chance for a better defense to minimize further damages.  

Settling For Less Than The Full Amount

Another  negative aspect of a debt collection service on your side is they may advise the debtor to settle for a lower sum thinking they’re helping your cause when, in fact, they may be doing permanent damage to your financial position. 

Settling for a lesser amount remains a black stain on your credit for years. In addition, the IRS may look at the settled portion of your debt as actual income and require you to pay taxes on that. Paying the amount in full – if you possibly can – will close the case, prevent any chance of a debt lawsuit and will not adversely reflect on your credit rating for a lifetime. 

No matter what resolution occurs, it will take time to recover your good credit standing. The next goals are to, obviously, not repeat past mistakes and continue to over leverage your credit cards.

Better yet, keep spending down and then pay the exact balance of the credit card each month. Doing So over time will slowly start to repair your credit as you show fiscal responsibility. 

No one ever dreams of getting into deep credit card debt. For many, it sneaks upon them until the debt is too much to manage. When it appears that you’re losing the battle with mounting debt and collectors are knocking on your door, reach out to a consumer advocacy debt legal team. The good news is most attorney groups, like the GM Law Firm, offer free consultations to lay the groundwork of what you’re facing and how best to fight back.