Can a Credit Card Company Sue Me? How to Protect Your Rights

Receiving a thick envelope of legal papers is terrifying. It’s designed to be. If you’re asking, “Can a credit card company sue me?” the answer is unfortunately yes, and you’re not the only one facing this. You’ve joined the 4.7 million Americans who are sued for debt each year. It’s a stressful and isolating experience, but the worst thing you can do is ignore it. The company suing you is counting on you to be too scared or confused to act. This guide is here to change that. We’ll walk you through exactly what’s happening, what your rights are, and the immediate steps you can take to respond and defend yourself without needing to hire an expensive attorney.

Key Takeaways

• Responding by the deadline is your most critical step: If you don't file a formal Answer with the court in time, the creditor wins by default and can then legally garnish your wages or seize funds from your bank account.
• Make the creditor prove their case: You have the right to question the lawsuit's validity. Check if the debt is too old (past the statute of limitations) or demand proof that the company suing you actually owns the debt.
• You have affordable options to fight back: You don't have to hire an expensive lawyer to file your response. Tools are available to help you create and file the correct legal documents to protect your rights and avoid a default judgment.

Can a Credit Card Company Sue You? (The Short Answer)

Let’s get right to it: Yes, a credit card company can sue you for an unpaid debt. If you’ve received a thick envelope of legal papers, you’re probably feeling overwhelmed and anxious, but you are not alone. Every year, millions of Americans are sued for debt, and the most critical thing to understand is that you must take action.

Here’s why: A staggering 70% to 90% of these lawsuits end in a default judgment. This is a legal term that simply means the company that sued you wins automatically because you didn’t show up or file a response. When that happens, they gain powerful legal tools to collect the money, like garnishing your wages or freezing your bank account.

The good news? A lawsuit doesn't happen overnight. It typically comes after about six months of missed payments and collection attempts. More importantly, receiving a lawsuit doesn’t mean you’ve already lost. It means you have a limited time—often just 14 to 30 days—to formally respond to the lawsuit and protect your rights. Ignoring the paperwork is the one mistake you can’t afford to make. This guide will walk you through exactly what happens next and the steps you can take to defend yourself.

When Can a Credit Card Company Take You to Court?

A credit card company can sue you as soon as you default on your payments according to your cardholder agreement. This usually isn’t their first move. Before filing a lawsuit, a creditor will typically spend several months trying to collect the debt through calls and letters. If those attempts fail, they may decide to take legal action to get a court judgment against you.

A judgment is a powerful tool that allows them to use more aggressive collection methods, like garnishing your wages or levying your bank account. While getting sued is stressful, it’s a standard part of the debt collection process. Understanding who is suing you and why is the first step toward building a strong response.

Who Is Suing You: The Original Creditor or a Debt Buyer?

Take a close look at the name on the lawsuit paperwork. Is it your original credit card company, or is it a name you don’t recognize, like Midland Credit Management or Portfolio Recovery Associates? If it’s the latter, you’re likely being sued by a debt buyer. These companies purchase old, unpaid debts from original creditors for pennies on the dollar. Their business is to then try and collect the full amount from you. It's a common practice, and yes, debt buyers can legally sue you. Knowing this is crucial because it can be a key part of your defense. The debt buyer has to prove they legally own your specific debt, and sometimes their documentation is weak or incomplete.

How Much Debt Triggers a Lawsuit?

While a creditor can technically sue you for any amount, it’s a business decision. Lawsuits cost money, so they have to weigh the expense of legal action against how much they can recover. Because of this, lawsuits are much more common for debts over $1,000. The chances of being sued increase significantly if you owe several thousand dollars. Some sources suggest that credit card companies often sue for balances over $2,700, but they can sue for less. If your debt is under $2,000, a lawsuit is less likely, but not impossible. Don't assume you're safe just because the amount seems small. The decision ultimately rests with the creditor or debt buyer holding your account.

What Happens If You Ignore the Lawsuit?

Getting a lawsuit in the mail is scary, and your first instinct might be to ignore it and hope it goes away. But that’s the single worst thing you can do. Ignoring a lawsuit doesn't make it disappear; it guarantees you lose. A staggering 70-90% of people sued for debt don't respond, and as a result, the court enters an automatic default judgment against them. This means the company suing you wins without ever having to prove its case. Once they have that judgment, they gain powerful legal tools to collect the money from you, whether you actually owe it or not. The good news is that you have the power to prevent this. By simply responding, you protect your rights and force the creditor to prove their claim. It’s the first and most critical step in fighting back.

What Is a Default Judgment?

So, what exactly is a default judgment? Think of it like forfeiting a game. If you don't show up to play, the other team wins automatically. In the legal world, when you fail to file a formal response (called an "Answer") with the court by the deadline, the judge assumes you don't contest the claims. The court then issues a judgment in the creditor's favor without a trial. This isn't just a symbolic win for them. A default judgment is a legally binding court order that gives the creditor powerful tools to collect the debt. You lose your chance to tell your side of the story, challenge the amount owed, or raise any defenses.

The Real Costs of Not Responding

A default judgment is more than just a piece of paper—it has serious, real-world consequences. With this court order, a creditor can take aggressive collection actions that were illegal before the lawsuit. They can ask the court for permission to garnish your wages, meaning they can take money directly from your paycheck. They can also freeze your bank account and seize the funds inside, which is known as a bank levy. In some cases, they can even place a lien on your property, like your home or car. Responding to the lawsuit is your only chance to prevent these outcomes. Filing an Answer to the lawsuit is the official step that keeps your case open and protects your assets.

What Happens If You Lose the Lawsuit?

Losing a debt collection lawsuit isn't just about getting a bill from the court. When a judge issues a formal decision, called a judgment, against you, it gives the creditor powerful legal tools to collect the money you owe. This is why simply ignoring a lawsuit is so risky. The consequences of a judgment can directly impact your paycheck, your bank account, and your property for years to come. Understanding these outcomes is the first step in realizing why it's critical to respond to the lawsuit and defend your rights from the very beginning.

Can They Garnish Your Wages or Seize Assets?

Yes. If a creditor wins a judgment against you, they can ask the court for a "writ of garnishment." This is a court order sent directly to your employer, requiring them to withhold a certain amount from your paycheck and send it to the creditor. Federal and state laws place limits on how much of your income can be garnished, but it can still be a significant portion of your take-home pay. This process continues until the debt, plus any interest and legal fees, is fully paid. It’s a direct and often surprising hit to your finances, making it harder to cover your regular living expenses.

Can They Freeze Your Bank Account or Put a Lien on Your Property?

A court judgment also allows a creditor to go after the money in your bank account through a process called a bank levy. The creditor can get a court order to freeze your account and seize the funds—up to the amount you owe—without any further warning. They can also place a lien on your property, such as your home or car. A property lien is a legal claim against your asset that can prevent you from selling or refinancing it until the debt is paid. These actions can happen quickly after a judgment is entered, leaving you with little time to react.

How a Lawsuit Impacts Your Credit Score

While a civil judgment itself no longer appears on your credit report, the events surrounding it can still cause significant damage. The original delinquent account that led to the lawsuit will remain on your credit report for seven years, hurting your score the entire time. Furthermore, the financial strain from a wage garnishment or bank levy can make it difficult to keep up with your other bills. Any new missed payments on other accounts will be reported to the credit bureaus, pulling your score down even further and making it harder to get approved for credit in the future.

You've Been Served: Your First Steps

Receiving a lawsuit is jarring, but taking a deep breath and acting methodically is your best path forward. The documents you received—usually called a Summons and Complaint—are official court papers that start a legal clock. You have a limited time to respond, and what you do in the next few days is critical. Don't panic. Instead, focus on these three immediate, actionable steps to protect your rights and prepare your defense.

Find Your Response Deadline (It's Urgent)

The first thing you need to find on the court papers is your deadline to respond. This is not a suggestion. You typically have a short window, often between 20 and 30 days, to file an official response with the court. If you miss this deadline, the credit card company can ask the court for a default judgment, meaning they win automatically. This could happen without you ever getting a chance to tell your side of the story. Mark this date on your calendar and treat it as your top priority.

Gather Your Documents

Next, carefully read the lawsuit and gather any related paperwork you have. Creditors and debt buyers can make mistakes. The lawsuit might list an incorrect amount, the debt might not even be yours, or it could be a debt you’ve already paid. Look for any records you have related to the account, such as old statements, proof of payment, or any letters you’ve sent or received. Having your documents organized will help you spot inaccuracies and build your defense. It’s important to understand your consumer rights during this process.

File Your Answer with the Court

You must respond to the lawsuit by filing a formal document called an "Answer" with the court. This is your official reply to the credit card company's claims. In your Answer, you can deny their allegations and state any defenses you might have. Simply showing up in court isn't enough; you need to file this written response by the deadline. Failing to file an Answer is the same as not showing up at all. You can prepare this document yourself or use a service to help you create and file it correctly.

How to Defend Yourself in a Credit Card Lawsuit

When you’re sued over a debt, it’s easy to feel powerless. But you have rights, and you have options. The company suing you has the burden of proof—they have to show the court that you owe the debt, that the amount is correct, and that they have the legal right to collect it. This is a high bar, and sometimes they can’t meet it.

Raising a defense isn’t about finding a loophole; it’s about holding the debt collector accountable and making sure the lawsuit is valid. Many of the 4.7 million debt collection lawsuits filed each year rely on consumers not showing up or responding. By simply filing an Answer and raising a defense, you change the entire dynamic. You force the plaintiff to prove their case, which they may not have the documentation to do. Below are three of the most common and effective defenses you can use to protect yourself.

Check the Statute of Limitations

Every state has a law called the statute of limitations, which sets a time limit on how long a creditor can sue you for a debt. This period typically starts from the date of your last payment and usually ranges from four to six years, depending on your state’s laws. If the debt collector is suing you for a debt that’s older than this time limit, the lawsuit is considered "time-barred." This is a powerful defense. If you can show the court that the statute of limitations has expired, you can file a motion to have the case dismissed entirely. It’s one of the cleanest ways to win a debt collection lawsuit.

Make Them Prove They Own the Debt

You have the right to demand that the company suing you prove two things: that the debt is yours and that they legally own it. This is especially important if you’re being sued by a debt buyer—a company that purchases old debts from original creditors for pennies on the dollar. Sometimes, the paperwork gets lost in the transfer. You can formally challenge their claim by sending a debt validation letter, which requires them to provide documentation proving their ownership. If they can’t produce a signed contract or a clear chain of title showing they have the right to collect, the court may dismiss their case. Don’t just take their word for it; make them show their proof.

Look for Errors in Their Paperwork

Debt collectors and large credit card companies handle thousands of accounts, and mistakes are surprisingly common. Carefully review every single document you receive, including the Summons and Complaint. Look for any inaccuracies, no matter how small. Does the lawsuit list the wrong name or address? Is the account number incorrect? Is the amount they claim you owe different from what you remember? They might even be suing you for a debt you’ve already paid off. Any error in their paperwork can be used in your defense to question the validity of their entire claim. If you find a mistake, document it and include it in your official Answer to the court.

Can You Settle the Debt During a Lawsuit?

Yes, you absolutely can. Getting a court summons doesn't mean the conversation is over—in many cases, it’s just getting started. A lawsuit is a formal, and expensive, step for a creditor to take. Because they are now spending money on legal fees to pursue the debt, they might be more motivated than ever to reach a settlement with you and close the case.

Negotiating a settlement allows you to resolve the debt, often for less than the original amount owed, and get the lawsuit dismissed. It’s a chance to regain some control over the situation, but you need to approach it carefully. You have to protect yourself throughout the process.

Explore Settlement and Payment Plans

Even after being sued, you can still try to make a deal. The most common type of settlement is a lump-sum payment, where you agree to pay a reduced amount all at once to clear the debt. Since the company gets its money immediately, they are often willing to accept a significant discount. If a single payment isn't realistic for your budget, you can also try to negotiate a structured payment plan. The key is to open a line of communication and show you’re willing to work toward a resolution. The Federal Trade Commission offers guidance on what to expect when you begin these conversations.

Know Who You're Negotiating With

Before you make any offers, you need to be 100% sure who you're dealing with. Is it the original credit card company, or is it a third-party debt buyer? Many credit card companies sell old debts to other companies for pennies on the dollar. These debt buyers can also sue you, but they may have more room to negotiate because they paid so little for the debt in the first place. This is why it’s so important to make the plaintiff prove they have the legal right to collect from you. You can formally challenge them to provide proof of ownership with a debt validation letter. Never start negotiating until you’re certain the person you’re talking to legally owns the debt.

Always Get Your Agreement in Writing

This is the most important rule of settling a debt: if it’s not in writing, it didn’t happen. A verbal agreement over the phone is not enough to protect you. Before you send any money, insist on a formal, written settlement agreement signed by an authorized representative of the company. This document should clearly state the settlement amount, the payment due date, and that this payment will satisfy the debt in full. It should also explicitly state that the company will dismiss the lawsuit against you with prejudice, which means they can’t sue you again for the same debt. Having this paper trail is your ultimate protection.

Credit Card Lawsuit Myths, Busted

Getting sued is scary, and it's easy to spiral into worst-case scenarios fueled by myths you might have heard from friends or seen online. When you're facing a lawsuit, it's critical to separate fact from fiction. Let's clear up a couple of the biggest misconceptions so you can move forward with a clear head and focus on what really matters: protecting your rights and responding to the case against you.

Myth: You Can Go to Jail for Credit Card Debt

Let’s clear the air on the biggest fear right away: you cannot be arrested or sent to jail for failing to pay a credit card bill. The United States abolished debtors' prisons centuries ago. While the consequences of a lawsuit are serious, the threat of imprisonment for consumer debt isn't one of them. As legal experts confirm, you cannot go to jail for credit card debt. This doesn't make the lawsuit disappear, of course. If the creditor wins, they can use other legal tools to collect, but you can face this process without the fear of being put behind bars.

Know Your Rights as a Consumer

Okay, so you won't go to jail. But that doesn't mean you can ignore this. In fact, knowing your rights is your best defense. You are protected by a federal law called the Fair Debt Collection Practices Act (FDCPA), which shields you from abusive and unfair collection tactics. Once you receive the official court papers—a summons and complaint—the clock starts ticking. You have a very short window, usually 20 to 30 days, to file a formal response. Failing to respond is the costliest mistake you can make. If you miss the deadline, the creditor will likely win automatically by getting a "default judgment" against you.

How LawLaw Helps You Fight Back

Getting sued is stressful, and the legal system can feel like it's designed to be confusing. But you don't have to navigate this alone or drain your savings on an attorney. We created LawLaw to give you practical, affordable tools to fight back against debt collectors. Our platform breaks down the legal process into simple, manageable steps, helping you respond to your lawsuit correctly and confidently. We believe everyone deserves a fair chance to defend themselves, and our services are designed to make that possible.

Instead of getting lost in confusing legal paperwork, you can use our straightforward, attorney-reviewed process to assert your defenses. We help you meet critical deadlines and challenge the debt collector’s claims head-on. Think of us as your guide through the legal maze, providing clear instructions and automated tools so you can focus on what matters. Whether you need to file your official court response or send a formal letter demanding proof, you can explore our debt resources to see all the ways we can help.

Prepare and File Your Official Answer

When you’re sued, the most important thing you can do is respond. You have a strict deadline—usually 20 to 30 days—to file an official document called an "Answer" with the court. If you miss it, the debt collector can win automatically. Our core service helps you prepare and file your Answer to a debt lawsuit without the high cost of an attorney.

Our platform walks you through a simple questionnaire to gather the details of your case. From there, we generate the correct legal document formatted for your specific court. The service includes filing the Answer with the court and ensuring the opposing party is properly notified. We handle the procedural steps so you can meet your deadline and avoid a default judgment.

Use Our Free Tools to Challenge the Debt

Before you even file your Answer, you can put the debt collector on the defensive. You have the right to make them prove you actually owe the money and that they have the legal right to collect it. A great first step is to send a formal request for this proof. You can use our free debt validation letter generator to create and send this document, which forces the collector to pause their efforts until they provide validation.

Another powerful strategy is to check if the lawsuit was filed within the legal time limit, known as the statute of limitations. If the debt is too old, you can ask the court to dismiss the case. You can also check your original credit card agreement for an arbitration clause, which may allow you to move the case out of court using our motion to compel arbitration tool.

When to Hire an Attorney

While tools like LawLaw are designed to empower you to handle a debt lawsuit on your own, some situations have extra layers of complexity that benefit from a lawyer's direct involvement. Think of it this way: you can handle many home repairs yourself, but for a tricky electrical issue, you call a professional. The same logic applies here. Knowing when to seek legal counsel is a crucial part of protecting your rights. An attorney can offer personalized legal advice and represent you in court, which are services that legal technology platforms are prohibited from providing. The goal is to choose the path that gives you the best chance of a positive outcome, whether that’s using an affordable tool or investing in dedicated legal representation.

Signs Your Case Is Too Complex to Handle Alone

If you’re on the fence, look for a few key signs that your case might be more complicated than usual. Consider hiring an attorney if the debt is very large—think five figures or more—or if it’s connected to a business, a divorce, or potential fraud. You should also seek legal help if you believe the debt collector has seriously violated the law and you want to sue them back (this is called a counterclaim). A lawyer can help you navigate the court system and build a strategy tailored to the unique facts of your case, which is especially important when the stakes are high.

Know the Limits of Representing Yourself

Representing yourself, or using a service like LawLaw, is a powerful way to assert your rights. However, it’s important to understand the boundaries. Our platform provides attorney-reviewed documents and helps you file them correctly, but we can't stand up in court and speak on your behalf. If your case proceeds to a trial where you have to argue in front of a judge, you may feel more comfortable with an experienced attorney by your side. The most critical thing to remember is that you must respond. Ignoring a lawsuit because you’re unsure what to do is the surest way to get a default judgment against you.

Related Articles

• What to Do If You're Sued for Credit Card Debt
• How Credit Card Company Lawsuits Work
• A Practical Guide to Credit Card Debt Litigation

Frequently Asked Questions

What if I know I owe the money? Should I still respond to the lawsuit? Yes, you absolutely should. Responding to a lawsuit isn't just about claiming you don't owe anything. It's about protecting your rights and forcing the company suing you to legally prove every part of its case, from the exact amount owed to its legal right to collect. Filing an Answer prevents them from getting an automatic win and gives you the time and leverage to negotiate a settlement, check for errors, or confirm the debt isn't too old to be collected.

Will I have to go to court and argue in front of a judge? Not necessarily. In fact, most debt collection lawsuits never make it to a trial. Filing an Answer is the critical first step that shows the other side you're serious about defending yourself. This action often opens the door to settlement negotiations, as it's usually cheaper and easier for them to make a deal than to proceed with a full court case. While a court date is always a possibility, responding doesn't guarantee you'll end up in a courtroom.

Can I just call the law firm on the paperwork to work something out? You can, but you should be very careful. Before you pick up the phone, it's best to have your official Answer filed with the court. This protects you from a default judgment in case your negotiations don't work out. If you do reach an agreement, never send a payment based on a verbal promise. Always insist on a formal, written settlement agreement that clearly states the lawsuit will be dismissed.

What's the difference between a debt buyer and my original credit card company? A debt buyer is a company that purchases old, unpaid debts from original creditors for pennies on the dollar. Their business model is to then try and collect the full amount from consumers. This distinction is important because the debt buyer has the legal burden to prove they now own your specific debt. Sometimes their documentation is weak or incomplete, which can be a powerful part of your defense.

What if I miss the deadline to respond? Is it too late? Missing the deadline is serious, as it allows the creditor to ask the court for a default judgment against you. If a judgment hasn't been officially entered yet, you may have a very small window to act, but you must move quickly. Once a judgment is finalized, your options become much more limited and difficult. This is why it is so critical to treat the deadline on your summons as an absolute priority.