What Happens When a Credit Card Sues You: Your Next Steps

The single biggest mistake you can make after being sued by a credit card company is doing nothing at all. It’s a trap that countless people fall into, and it’s exactly what the debt collector is hoping for. Ignoring the lawsuit guarantees they win a default judgment against you, giving them the legal power to garnish your wages or freeze your bank account. But you have more control than you think. The law gives you the right to respond and demand they prove their case. This article explains what happens when a credit card sues you so you can avoid that costly mistake. We’ll walk you through the process, your options, and how to take the first critical step: filing your Answer.

Key Takeaways

• Prioritize Your Response Deadline: The moment you're served, a clock starts ticking. You have a strict window, usually 14-30 days, to respond. Missing this deadline results in an automatic loss, called a default judgment, which gives the creditor power to garnish your wages.
• File a Formal "Answer" to Defend Yourself: A lawsuit isn't a final verdict; it's an accusation. Filing a formal "Answer" with the court is the essential first step to challenge the claims, state your defenses, and force the company suing you to prove its case.
• Affordable Help Is Available: You don't have to choose between hiring an expensive attorney and doing nothing. Resources exist to help you validate the debt and generate the correct legal documents, allowing you to respond correctly and on time without breaking the bank.

What Happens When a Credit Card Company Sues You?

Receiving a thick envelope with official court documents is enough to make anyone’s heart sink. If a credit card company is suing you, it’s easy to feel overwhelmed and unsure of what to do next. But taking a deep breath and understanding the process is the first step toward protecting yourself. A lawsuit is usually the last resort for a creditor after other collection efforts, like calls and letters, haven’t worked. Knowing what’s happening, what the terms mean, and what deadlines you’re facing will give you the clarity you need to move forward.

The Lawsuit Process, Step by Step

A credit card lawsuit doesn’t just appear out of the blue. It begins when the creditor or a debt collector files a formal complaint with the court. Once filed, they must legally notify you of the lawsuit through a process called “service of process.” This is when you receive the official papers, which typically include a Summons and a Complaint. The Summons is a court document that officially tells you that you’re being sued, while the Complaint outlines why they are suing you and what they want—usually, the total amount of the debt plus interest and fees. It’s critical to read these documents carefully, as they contain all the key details about your case.

Key Deadlines You Can't Afford to Miss

Once you’ve been served, a countdown begins. You have a very specific and strict amount of time to formally respond to the lawsuit. This deadline is non-negotiable and is usually between 14 and 30 days, depending on your state and court rules. The exact date will be stated clearly in the Summons you receive. Ignoring this deadline is one of the biggest mistakes you can make. If you fail to file a response with the court in time, the credit card company can ask for—and will likely win—a default judgment against you. This means you lose the case automatically, without ever getting a chance to tell your side of the story.

Legal Terms, Explained Simply

The legal world is full of confusing jargon, but you only need to know a few key terms. A default judgment is what happens when you don’t respond to the lawsuit on time. It’s a binding court ruling in the creditor’s favor. Once they have this judgment, they can take more aggressive steps to collect the money. This often involves getting a court order for wage garnishment, which allows them to take a portion of your paycheck directly from your employer. They might also be able to freeze or take money from your bank account through a bank levy. Think of the judgment as the court giving the creditor the legal power to collect the debt using these methods.

Why Credit Card Companies Sue

Receiving a lawsuit from a credit card company can feel personal and intimidating, but it’s important to remember that it’s a business decision. For a creditor, filing a lawsuit is the final step in a long collection process. They’ve decided that taking you to court is the most effective way to recover the money they believe you owe. Understanding why and when they take this step can help you feel more in control of the situation. It’s often not even the original credit card company suing you, but a third-party debt buyer that purchased your old debt for pennies on the dollar.

How Unpaid Debt Turns into a Lawsuit

A lawsuit doesn’t happen overnight. It’s the last stop on a journey that begins with a few missed payments. Initially, the credit card company will try to contact you through phone calls and letters. If several months pass without payment, they will likely close the account. At around the 180-day mark, the creditor may consider the debt a loss for accounting purposes and update your credit report with a "charge-off." This doesn't mean the debt is gone. Instead, the company might intensify its collection efforts or sell your debt to a collection agency. This new owner of your debt may then decide to file a lawsuit to collect.

Warning Signs: What Happens Before They Sue

Before a lawsuit is filed, the communication from the creditor or debt collector usually becomes more serious. You might receive a formal "demand letter" that threatens legal action if you don't pay by a certain date. This is a clear signal that the creditor is preparing to sue. While collection calls and letters are standard, a shift in tone to explicitly mention a lawsuit or legal proceedings is a major red flag. All of these communications are regulated, and it’s wise to know your rights under federal law to protect yourself from harassment. Paying attention to these warning signs gives you a chance to act before the situation escalates to a court summons.

How Much Debt Triggers a Lawsuit?

There is no magic number that automatically triggers a lawsuit. While one study found the average credit card debt leading to a lawsuit was around $2,700, creditors can and do sue for much less. The decision comes down to a simple calculation: is it worth the cost? Filing a lawsuit involves court fees and attorney expenses, so the creditor must believe they have a good chance of recovering more than what they spend. Factors like the laws in your state and the amount of evidence the creditor has can also influence their decision. Ultimately, any amount of unpaid debt carries a risk of a lawsuit, so it’s never wise to assume your debt is too small to matter.

You've Been Served a Summons. Now What?

Seeing a process server at your door is a jarring experience. That thick packet of papers—the Summons and Complaint—can feel overwhelming, but it’s not a final verdict. It’s the start of a legal process, and you have a crucial role to play. Taking a deep breath and understanding your next steps is the best way to move from feeling panicked to feeling prepared. The key is to act quickly and strategically.

Don't Miss Your Deadline: The 14-30 Day Rule

The most important piece of information in your lawsuit papers is the deadline to respond. You typically have between 14 and 30 days from the day you were served to file a formal response with the court. This is not a suggestion; it’s a hard deadline. If you miss it, the credit card company can ask the court for a default judgment. This means they win automatically because you didn't show up to defend yourself. The court can then grant them the power to garnish your wages or freeze your bank accounts without hearing your side of the story. Meeting this deadline is the single most critical step in the entire process.

How to Read the Complaint Against You

The Complaint is the document where the company suing you (the plaintiff) lays out its case. Read it carefully. It will state who is suing you, why they believe you owe them money, and exactly how much they claim you owe. It’s their story, but it’s not automatically the truth. The burden of proof is on them. As you read, ask yourself: Do I recognize the original creditor? Is the amount correct? Does this company actually have the legal right to sue me? According to the Consumer Financial Protection Bureau, the collector must be able to prove everything they claim. Any inconsistencies are important details for your defense.

Your First Steps to Protect Your Rights

Your first move is to formally respond to the lawsuit by filing a document called an "Answer" with the court. This is how you officially tell the court that you are participating in the case and defending yourself. In your Answer, you respond to each claim made in the Complaint and can also raise your own defenses, known as affirmative defenses. For example, the statute of limitations may have expired, or the person suing you may not be able to prove they own the debt. Filing an Answer prevents a default judgment and forces the plaintiff to prove their case. It’s the fundamental step to protect your rights and your finances.

Common Myths That Can Cost You Your Case

It’s easy to fall into a trap of wishful thinking, but some common myths can lead to devastating consequences. The biggest one is believing that ignoring the lawsuit will make it go away. It won’t. In fact, not responding is exactly what the debt collector is hoping for, as it gives them an easy win. Another myth is that you can just call the collector to sort it out. While you can negotiate, a phone call does not count as a legal response. You must file a formal Answer with the court. The Federal Trade Commission warns that ignoring a lawsuit means the court can rule against you without ever hearing your side of the story.

The Consequences of Ignoring a Lawsuit

When a thick envelope with legal documents arrives, the urge to ignore it can be overwhelming. It’s a stressful situation, and it’s tempting to hope it will just go away. But ignoring a lawsuit is the one thing you absolutely cannot do. Failing to act doesn't make the problem disappear; it guarantees that you lose the case and face serious financial consequences. The good news is that you have rights and options, but you have to act quickly to use them. Let's break down exactly what happens when you don't respond to a credit card lawsuit.

The Danger of a Default Judgment

If you don't file a formal response with the court by the deadline, the credit card company or debt collector will ask the court for a default judgment. This is an automatic win for them. The judge will likely grant it without ever hearing your side of the story or reviewing the evidence. A default judgment is a legally binding court order stating that you owe the debt. It’s the key that unlocks the creditor’s ability to take more aggressive collection actions against you. Essentially, by not responding, you give up your right to defend yourself, question the debt, or negotiate.

Risking Your Paycheck: Wage Garnishment and More

Once the creditor has a default judgment, they can use it to force you to pay. The most common methods are wage garnishment and bank account levies. With wage garnishment, the court orders your employer to withhold a certain amount of money from your paycheck and send it directly to the creditor. With a bank levy, the creditor can freeze your bank account and take funds directly from it to satisfy the debt. The judgment gives them the legal power to collect the debt in ways they couldn’t before the lawsuit. This can happen suddenly and without much warning, making it incredibly difficult to pay your regular bills.

How a Lawsuit Impacts Your Financial Future

A judgment doesn't just affect your immediate cash flow; it has long-term consequences for your financial health. A judgment against you becomes part of the public record and can be reported on your credit report for up to seven years. This will significantly lower your credit score, making it harder and more expensive to get a car loan, a mortgage, or even a new credit card. Some landlords and employers also check public records, so a judgment could impact your ability to rent an apartment or get certain jobs. Even if you feel like you can't afford to fight, remember that you have options to avoid these outcomes.

How to Respond and Defend Yourself

Getting served with a lawsuit is jarring, but it’s not a final verdict. You have rights, and more importantly, you have options. Taking action is the single most important thing you can do right now to protect your finances. Ignoring the lawsuit guarantees the credit card company wins by default, which can lead to wage garnishment or liens on your property. But by responding, you put yourself back in control. This section is your game plan for facing this challenge head-on. We’ll walk through the key steps for defending yourself, from filing your official response to gathering the evidence you need.

File an Answer and State Your Defenses

Your first move is to file a formal document with the court called an “Answer.” This is your official response to the lawsuit, and it’s how you tell the court you’re fighting the case. If you don't file an Answer within your state's deadline, the court can issue a default judgment against you, meaning you automatically lose. This can lead to having your wages garnished or your bank account frozen. In your Answer, you can also state your defenses—the legal reasons why the creditor shouldn't win. Filing a written Answer to the lawsuit is the critical first step to protecting yourself and preventing the company from getting an easy win.

Strategies for Negotiating a Settlement

Even after a lawsuit is filed, you can still try to negotiate a settlement. Many companies are willing to settle for less than the full amount to avoid the time and expense of going to court. You can contact the law firm representing the creditor to start this conversation. If you reach an agreement, get it in writing before you pay anything. Be cautious with payment plans. In some states, making a payment can restart the clock on the statute of limitations, which is the time limit for a creditor to sue you. If possible, try to pay the agreed-upon settlement amount in a single lump sum to fully resolve the debt and close the case for good.

DIY vs. Getting Help: Making the Right Choice

You have the right to represent yourself in court, but the legal system can be complex. While hiring a consumer protection lawyer is a great option, the cost—often thousands of dollars—is a major barrier for many people. This is where you need to weigh your options. Are you comfortable with legal research and strict court deadlines? Or do you need support? Fortunately, there are more affordable choices. Services like LawLaw can help you generate and file your legal documents correctly without the high price tag of a traditional attorney. This gives you a way to respond confidently and meet your deadline, which is the most important part of avoiding a default judgment.

Gather Your Evidence: What You'll Need

The company suing you has the burden of proof. That means they have to prove to the court that you owe the debt, the amount is correct, and they have the legal right to collect it. Your job is to look for holes in their case. Start by gathering all your own records: old credit card statements, letters from the collector, and any proof of payments you’ve made. You can also formally request that they provide proof that the debt is valid. This is often done with a debt validation letter. Sometimes, debt buyers purchase old debts with incomplete records, and they may not be able to produce the original documents needed to win in court.

Resources That Can Help You Respond

Facing a lawsuit can feel isolating, but you don’t have to figure everything out on your own. Several resources are available to help you understand your rights and take the right steps to protect yourself. Whether you need help with legal documents or a clear template to follow, there are affordable and accessible options to guide you through the process.

Find Affordable Help with Legal Documents

If the cost of hiring an attorney is a major concern, you still have options. Many people can find free or low-cost legal help through nonprofit organizations. The Legal Services Corporation is a great starting point, as it funds legal aid offices across the country for low-income individuals. You can also check with your local or state bar association, as many run pro bono programs that connect people with volunteer attorneys who can offer guidance or assistance with your case.

Use Debt Validation Letters and Templates

Before you do anything else, it’s smart to make the creditor prove you actually owe the money. You have the right to ask the debt collector to validate the debt, which means they have to provide written proof of what you owe. This is a critical first step that can sometimes stop a lawsuit in its tracks if the collector has poor records. Using a debt validation letter tool can simplify this process by generating a formal request you can send to the collection agency, forcing them to verify the claim against you.

Get Help Filing Your Response with the Court

The most important thing you can do after being sued is to respond. Ignoring the lawsuit won’t make it go away; instead, it allows the court to issue a default judgment against you. Your response, typically called an "Answer," must be filed with the court within a strict deadline. The instructions are in the paperwork you received. If you need help preparing and filing your documents correctly, LawLaw’s Debt Lawsuit Response service can generate the right legal forms and file them with the court for you, ensuring you meet your deadline and protect your rights.

Related Articles

• What to Do If You're Being Sued by a Credit Card Company
• Getting Sued by a Credit Card Company: What You Need to Know

Frequently Asked Questions

What is the single most important thing I need to do right now? The most critical step is to file a formal document called an "Answer" with the court before your deadline. This is the only way to officially respond to the lawsuit and prevent the credit card company from winning an automatic default judgment against you. Everything else, including trying to negotiate, comes second to meeting that deadline.

I know I owe the money, so should I still bother responding to the lawsuit? Yes, you absolutely should. Responding to the lawsuit isn't just about claiming you don't owe the debt. It forces the company suing you to legally prove their case. They must show they have the right to sue you, that the amount is correct, and that they filed within the legal time limit. Filing an Answer keeps your options open and prevents them from getting an easy, automatic win.

Can I just call the law firm on the paperwork to work something out? While you can and should try to negotiate, a phone call does not stop the legal process. A phone conversation is not a formal legal response, and the clock on your deadline to file an Answer with the court will keep ticking. You must file your official documents with the court to protect yourself from a default judgment, even if you are also talking to the other party.

I can't afford a lawyer. Does that mean I have no choice but to let them win? Not at all. While hiring a traditional attorney can be expensive, it's not your only option. You have the right to represent yourself, and there are affordable resources designed to help you do just that. Services like LawLaw exist to help you generate and file the correct legal documents without the high cost, ensuring you can respond to the lawsuit confidently and protect your rights.

What happens if I respond to the lawsuit but still lose? If the court rules against you after you've participated in the case, the result is a judgment. However, by responding, you have already achieved several important things. You forced the plaintiff to prove their case, gave yourself time to explore your options, and may have been able to negotiate a better outcome than you would have with a default judgment. You remain in a much stronger position than if you had simply ignored the lawsuit from the start.