Unlike the creditor of a secured debt, like a mortgage, who requires collateral for the debt that it can sell it to satisfy the debt, the creditor of an unsecured debt, like a credit card, can only file a lawsuit against you personally as recourse to recover an unpaid debt.
According to the Federal Reserve, U.S. credit card debt stood at $770 billion in early 2021. Understand, too, that credit card companies don’t sue capriciously. But if you fail to make the minimum monthly payment and carry a high balance, you’re going to get the dreaded phone call or court summons.
What happens if you get sued by a credit card company?
There also may be tax consequences associated with debt settlement. The bottom line is this: if you’ve been sued by a credit card company, call an attorney right away to explore your options. Ignoring the lawsuit will only play into the hands of your creditors — which is exactly what the credit card company is banking on.
Can a credit card company get a judgment against you?
If you are in default on a credit card account, the credit card company can try to get a credit card debt judgment against you by filing a lawsuit. If the credit card company gets a judgment, it can use all sorts of collection methods against you to get paid.
Can a credit card company win a lawsuit by default?
No, it’s because debtors usually do nothing when faced with a lawsuit. It is a rare debtor that will file an answer to a complaint to dispute even a valid debt. This allows the credit card company to win the lawsuit by default. Why is this important? As mentioned above, the judgment is the court’s determination that the debt is due.
Can a credit card company keep you from going to court?
Negotiating with your credit card company can keep you from going to court. A credit card company or collection agency must take you to court to get a judgment against you. If you lose the lawsuit and a judgment is issued, a creditor can collect the money you owe.
