When you’re served with a lawsuit for a credit card or other consumer debt, you’re like a deer frozen in the headlights. Maybe you don’t realize you’re being sued. Perhaps you don’t think there’s anything you can do to stop the wheels of justice from turning. Think again.
In courts all across the country, every day thousands of credit card issuers and debt buyers file lawsuits against people for unpaid debt. Stand at the clerk’s window and you’ll see people walk in with stacks of complaints that are inches high, and each one represents money in the bank for the credit card industry.
I’ve seen statistics saying that 80% of the credit card lawsuits filed in New York end up in a default judgment, and the numbers are higher elsewhere. Each one of these default judgments leaves consumers responsible for tens of thousands of dollars. The results include income executions, bank account restraints, and an ever-deepening cycle of financial difficulty.
In my firm, we see people every day with default judgments. Personally, I think that 80% figure is a low-end estimate.
If only people followed these simple steps to avoiding default.
Open Your Mail (No Matter How Scary It Is)
We’re raised to think the only way we can be served with a lawsuit is by personal service. Though that’s the preferred method, New York law allows the plaintiff (that’s the entity suing you) to serve you by mail if they can’t get it in your hand.
A copy needs to be posted on your door, but if you live in an apartment building there’s no telling how long that’s going to last before someone rips it down.
Maybe that’s the rule where you live. Maybe not.
To be safe, open the mail. If you’re being sued, you’ll get a copy in an envelope.
Read The Mail
Letters look like … well, like letters. Lawsuits have a different look to them.
Some courts say that a consumer credit lawsuit needs to have an indication at the top telling you that you’re being sued. Other places require the creditor to use certain color paper.
In any event, a lawsuit does NOT look like a letter.
If in doubt, take the complaint to a lawyer or the county clerk to have someone explain it to you.
You get only a short amount of time to respond to a lawsuit before it goes to default, so don’t waste a minute.
Some states give you 30 days to answer the lawsuit, others give a different response deadline based on how your got the papers.
Most people have no idea of what the rule is in their state because it’s not something they’ve ever had to know. That’s why you should always act as if the response is due today.
Don’t wait, don’t forget, and don’t do it tomorrow.
Get down to the court to file an answer or speak with a lawyer to map out a defense. Every minute is precious.
Agree To Nothing
A lawsuit is nothing more than someone claiming something against you. In the case of a credit card collection suit, it’s just someone claiming you owe them money.
In order for them to get a judgment, they need to prove every single element of the case.
It’s your job to make them work for it.
Don’t call the creditor and give an excuse for nonpayment. Don’t agree to pay them any money. And whatever you do, don’t imagine for one minute that they’re trying to help you.
Remember That Words Mean Nothing
A phone call to the credit card collector or their lawyer will not protect your rights. Sending a letter begging for help doesn’t mean a thing.
The only way to protect yourself is to file an answer to the lawsuit. Anything less than that requires that you trust the debt collector to hold off on a default while you make a deal.
And if you trust the debt collector’s word then you’re in for a bad ending.
For some people, defending the case is the right move. For others, bankruptcy or other settlement strategies work better.
You should spend some time with a lawyer like me who defends credit card collection lawsuits and also advises people about these other options.
If you find out that you can’t afford to hire a lawyer to defend you, find out if they offer reduced fees to help on a more limited basis.
And if that doesn’t work out, go to the court and ask the clerk if there are any pro bono (free) lawyers who can give you some pointers to handle it on your own.
At the very least, most courts will have some basic information on defending yourself.
Either way, you’re going to want to sit down with someone like me who can navigate the collection lawsuit waters.