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Can You Be Sued For Credit Card Debt?

Can You Be Sued for Credit Card Debt?When you fall behind on your credit card debt your creditors have several options available to collect on the debt. One of the options is filing a lawsuit to collect on the debt. Credit card companies have the option to sue you in court to try to collect on the debt. When and if a creditor will decide to sue you varies in every case. Some credit card companies may decide not to go this route and simply opt for contacting you via collection calls.

What Can Happen if the Creditor Sues You?

If a creditor has sued you and you fail to respond to the lawsuit then the creditor will be able to obtain a default judgment against you. A default judgment can be obtained when you have failed to respond to the lawsuit in the time frame that was provided to you in the summons. If a creditor obtains a default judgment against you then there are several ways that they can try to collect on the judgment against you. In California a creditor can try to collect the judgment by:

  • Garnishing Wages - a credit card company can garnish your wages for up to 25% of your net paycheck. They creditor can only do this once they have obtained a judgment against you in court. Once they have this judgment and are able to investigate where you work then they will have the sheriff's office serve your employer with a wage garnishment order. To address this go to how Stop Wage Garnishments in California.
  • Levy of Bank Account- a credit card company can also place a levy on your bank account. If they are able to identify where you have a bank account then they will freeze and seize the money in your bank account to pay off the judgment.How to Stop a Bank Levy in California - File a Claim of Exemptions To address this go to:
  • Lien on Property-an abstract of judgment can be recorded with the county recorder which will place a lien on any real property you own within the county.

Each state has different laws that provide to creditors different options for collecting on a debt once they have obtained a judgment against you. What Are Your Options? If you are being sued by a credit card company then you have several options available to you:

  • Respond to the Lawsuit-If you feel there is a basis on which to dispute the lawsuit then you can file a response within the time provided in the summons. The creditor may not have a right to file a lawsuit if the statue of limitations to file the suit has passed. Each state has laws which limit the time by which a creditor can bring a lawsuit to collect on the debt. If they bring a lawsuit after the statute of limitations has passed then file an answer and defend the lawsuit on this basis.
  • File for Bankruptcy -Once you file for bankruptcy then the credit card company can no longer proceed with the lawsuit. The automatic stay in bankruptcy prevents them from moving forward with the lawsuit in court. Even if the creditor obtained a judgment, they must still cease any further collection action.
  • Contact the Creditor-If you want to work out a payment arrangement or resolve the matter outside of court then you can contact the creditor directly. Be aware that doing this may restart the statue of limitations in your state and prevent you from using this as a possible defense.

The worst thing you can do is do nothing if you are being sued by a credit card. Many people fail to take any action and find themselves in situations where the creditor has begun to garnish their wages, or levy a bank account. Once you are in this situation you may find yourself in a catch 22 where you need to file for bankruptcy, but don't have the money due to a garnishment or levy.


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