According to the latest Federal Reserve data, nearly half of American households have debt. And while debt is common, it can quickly become overwhelming, leading to negative consequences like poor credit, debt being sent to collections, and even lawsuits. If you’re being sued for your credit card debt, it’s important to understand your options, your chances of winning the lawsuit, and how to avoid debt collection lawsuits in the future.

Factors That Affect Your Chances of Winning a Credit Card Lawsuit

There’s no one-size-fits-all answer for whether you’re likely to win a lawsuit from your credit card company. However, there are a few factors that could affect your chances of success.

Validity of the Debt

One of the biggest determining factors of whether you’ll win a credit card lawsuit is the validity of the debt. When collecting a consumer debt, creditors are required to validate the debt in writing. They must provide the name of the creditor and borrower, the account number, the debt amount (including fees and interest), and other specific details. If a company can’t validate a debt, its chances of successfully getting a judgment against you are slim.

Another factor to consider is the statute of limitations on the debt. Most states have a statute of limitations on debt collection, meaning creditors can only take legal action against you for a certain number of years — it typically ranges from three to six years. Even if the debt is valid, the creditor may not be able to sue you if the statute of limitations on the particular debt has passed.

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Strength of Evidence and Documentation

A creditor’s case in court is only as strong as the evidence it provides, and the same can be said about you as the defendant. If you’re sued by your credit card company, it’s important to gather all of your records and documentation relating to the debt, including your payment history and any efforts you’ve made to contact the company about your difficulty in making payments.

Once you’ve gathered your evidence and documentation, be strategic about how you present it in court. If you aren’t comfortable doing this yourself, a debt relief attorney can help you make your case. The stronger the case you can make in your defense, the better your chances of winning.

When you’re sued by a debt collector for your creditor, you can choose to either represent yourself in court or hire a debt help lawyer. While it’s likely tempting to save money by representing yourself, you may be harming your chances of winning without help.

A reputable debt relief attorney likely has years of experience going to court against credit card companies or negotiating settlements outside of court. They are more likely to gain headway with the creditor and present a solid defense in court. If you choose to represent yourself, you’ll be facing an uneven match-up in court and may be less likely to win or negotiate a favorable settlement with your creditor.

Common Defenses in Credit Card Lawsuits

When you go to court for a credit card lawsuit, you’ll have the chance to argue your case. Let’s talk about some of the common defenses you could use to win the lawsuit.

Lack of Standing: Challenging the Creditor’s Right to Sue

You could win your credit card lawsuit by arguing the creditor’s right to sue. If your credit card company sold your debt to a debt collection agency, it might have a more difficult time proving its relationship to you and its right to sue. When you argue this defense, the debt collector will have to go through the effort to prove it purchased your account and that you owed the debt, and it may simply not be able to do that.

A creditor may also lack legal standing if the statute of limitations has already passed in your state. Make sure to research your state’s statute of limitations and compare that to the age of your credit card debt based on the date of the last payment.

Identity Theft or Fraudulent Charges: Proving You’re Not Liable

You aren’t legally responsible for credit card debt that was the result of identity theft or fraudulent charges. If someone uses your credit card to make purchases or opens a credit card in your name, you may not be liable for those purchases.

It’s important to note that if someone steals your identity or makes fraudulent charges on your credit card, it’s best to notify the credit bureaus and creditor long before the debt becomes a lawsuit. By filing a police report and letting your creditor know as soon as you notice the fraud, you can work to fix the situation immediately and avoid debt collection lawsuit altogether. However, if you weren’t more proactive about fixing the issue or didn’t know about it, this defense can protect you in court.

Fair Debt Collection Practices Act: A Creditor Violated Your Rights

The Fair Debt Collection Practices Act (FDCPA) lays out restrictions on how and when a creditor can contact you when attempting to collect a debt. It places certain time and place restrictions and prohibits harassment, misleading statements, or other abusive behavior on the part of the creditor collecting on consumer based debts.

If you can prove that a creditor violated the FDCPA when contacting you about your debt, you may be able to present it as an affirmative defense and have the case thrown out in court or could even counter-sue and recover damages of your own.

Payment, Settlement, or Discharge: You No Longer Owe the Debt

You won’t have a judgment issued against you if you can prove that you no longer owe the debt. This would be the case if you’ve already paid the debt or if you’ve negotiated a settlement with your creditor and have made good on your end of the deal. Another situation where you may no longer owe the debt is if you filed for bankruptcy like a chapter 7 or chapter 13 and the debt was discharged.

Weighing Your Options: Litigation vs. Settlement

If you’re sued by your credit card company or debt collector, you’ll have two options: you can go to court or negotiate a settlement.

When to Settle vs. When to Fight in Court

Ideally, you want to choose whichever option gives you the more favorable result. If you have a solid legal defense that you think will win you the lawsuit — for example, the statute of limitations has passed, or the debt was discharged in bankruptcy — then you may be better off going to court.

On the other hand, if you know the debt is valid and you don’t have a good defense that could help you win in court, you could ultimately end up paying less if you choose to settle.

Benefits and Risks of Out-of-Court Settlements

There are several benefits to negotiating an out-of-court settlement with a debt collector. Here are some reasons it might be a good idea:

  • You can end debt collection efforts: Once you enter into negotiations with your credit card company or debt buyer, they’ll end their aggressive debt collection efforts. This can help eliminate much of the stress that comes with credit card debt.
  • You can pay less: Debt collectors are often able to negotiate a lower payment amount, either in one lump-sum payment or monthly installments. Ultimately, you could lower your debt burden by settling the debt upwards of 50%.
  • You can avoid bankruptcy: If you’re at risk of filing for bankruptcy, negotiating your credit card debt could help you avoid that. This makes it a favorable option for both you and your creditor.

Of course, debt settlement also has its risks. There’s no guarantee you’ll be successful — you could go through all that effort and still end up in court. Additionally, debt settlement usually comes at a cost. You’ll likely have to pay either a debt settlement company or an attorney to represent you but that might be worth it. And even if the impact your credit. However if done right with an experienced debt settlement attorney all of those challenges can be limited.

Strategies for Negotiating a Favorable Settlement

If you’re considering settling your debt instead of going to court, it’s important to approach the process strategically. First, consider having someone experienced represent you in your settlement negotiations like an attorney since there will be a contract to review. While it’s possible to represent yourself, you may be more successful if you hire a debt settlement company or, even better, a debt settlement attorney.

Next, consider what you might be willing to offer in a settlement. How much can you afford to pay? Would you prefer a lump-sum payment or monthly installments? While you want to pay the lowest amount possible, you also want to make your offer appealing enough to make it worthwhile for the credit to avoid court.

Once you’ve come to a settlement agreement, make sure to get everything in writing in as much detail as possible to avoid the creditor trying to sue you anyway. And make sure to hold up your end of the bargain and make your agreed-upon payments. Otherwise, the creditor could still sue you and take you to court for the full amount.

What Happens After the Verdict?

If you take your debt collection case to court, there are two possible outcomes: you’ll win or you’ll lose. Here’s what each of those situations may look like.

If You Win the Case

If you win your debt collection lawsuit, then you won’t be required by the court to pay the debt. In fact, depending on the situation, you may even be able to counter-sue to recover your legal costs, especially if there was any wrongdoing on the plaintiff’s part.

However, that doesn’t mean the debt disappears. The debt can remain on your credit report for up to seven years, including any late or missed credit card payments. As a result, you likely won’t immediately see your credit improve by winning the lawsuit.

If You Lose the Case

If you lose the case, there could be several negative consequences. First, a judgment will be issued that requires you to pay some or all of your unpaid debt, and it could even require you to pay the plaintiff’s legal expenses.

Next, you could face wage or bank account garnishment or liens on your property. These measures are taken to ensure you pay the amount you owe. You can likely avoid garnishment by proactively paying the judgment amount. The good news is that judgments no longer appear as public records on your credit report and won’t affect your credit score.

It’s possible to appeal a debt judgment, but that’s only likely to be successful if you can truly prove there was an error and you shouldn’t be legally required to pay the debt.

Avoiding Future Credit Card Lawsuits

A credit card debt lawsuit is an experience no one wants to go through. The good news is there are steps you can take to ensure it doesn’t happen again in the future.

Verifying Debts Before Taking Action

If you ever receive a debt collection letter or phone call, don’t ignore it. It’s important to take steps to verify the debt, including asking the creditor to send you a debt validation letter. If you don’t recognize the debt or the creditor, you can dispute the debt or look into whether it’s a case of identity theft or a mistaken identity.

Checking the Statute of Limitations Before Responding

Before paying your debt or negotiating a settlement, check the statute of limitations in your state and the age of the debt, especially if it’s an old debt. If you can show the creditor the statute of limitations has passed, they may be less likely to pursue the case in court, given the likelihood of it being thrown out.

Understanding and Holding Debt Collectors Accountable

Federal law lays out certain rights for borrowers and restrictions on creditors. Under the FDCPA, debt collectors must follow time, place, and manner restrictions when contacting you about your debt. If you believe a debt collector has violated your rights, consider speaking with a debt relief attorney to learn about your options and hold the creditor accountable.

Exploring Bankruptcy Protections as a Last Resort

Bankruptcy can be a way of avoiding a credit card lawsuit, but it should only be left as a last resort. After all, a credit card lawsuit is often less harmful to your credit and your overall financial situation. That being said, if your debt is so overwhelming you know you won’t be able to pay or settle it, it may be worth exploring personal bankruptcy as an option to get relief from your debt.

Don’t Ignore a Lawsuit

Despite your best efforts, it’s possible you might someday find yourself facing a credit card lawsuit again. If that happens, it’s important to respond to the lawsuit — don’t ignore it. If you don’t respond, you’ll likely have a default judgment issued against you, meaning you won’t have the chance to present your case and will have to pay the debt. You may even end up having your wages garnished or bank accounts frozen or assets liened.

Getting Help With Your Credit Card Debt

Navigating a credit card lawsuit can be challenging, and it’s often best not to go through it alone. An experienced debt relief attorney can help you navigate the legal process, negotiate with your creditors, or make your defense in court. 

Tayne Law Group helps people in your situation get relief from their debt. Call us at (866) 890-7337 or fill out our short contact form for a free phone consultation and to find out if we’re the right fit to help you resolve your debt. We never share or sell your information, and all conversations are confidential.