How to Respond When Sued by a Credit Card Company

If you’ve been served with court papers, it’s easy to feel powerless, but the opposite is true. The law is on your side in one crucial way: the company suing you has the full burden of proof. They have to prove you owe the debt, that the amount is correct, and that they have the legal right to sue you. Answering the question of what to do if being sued by a credit card company starts with understanding this power dynamic. Simply filing a formal response forces them to show their cards. This guide will walk you through how to do just that. We’ll cover your immediate next steps, your legal defenses, and how to challenge the lawsuit without needing a law degree.

Key Takeaways

• Responding is your most powerful first step: Ignoring a lawsuit guarantees a default judgment against you. Filing a formal Answer before the deadline is the single best way to protect your finances and force the credit card company to prove its claims.
• Make the debt collector prove their case: The company suing you has the full burden of proof. You have the right to challenge whether the debt is too old, if they have the correct records, and if they even have the legal standing to sue you in the first place.
• Filing an Answer gives you control and leverage: Responding doesn't lock you into a long court battle. It’s a strategic move that prevents an automatic loss and gives you the time and power to either negotiate a favorable settlement or challenge the lawsuit on your terms.

Sued by a Credit Card Company? Your First 4 Steps

Receiving a lawsuit from a credit card company can feel like a punch to the gut. It’s stressful, confusing, and it’s completely normal to feel overwhelmed. But the single most important thing to remember is that you have rights, and taking action is the best way to protect yourself. Ignoring the problem won't make it disappear; in fact, it guarantees the company suing you will win by default.

Think of the next 48 hours as your window to get organized and take control. You don’t need to be a legal expert to get started. The process begins with a few straightforward, practical steps. By tackling these tasks first, you put yourself in a much stronger position to challenge the lawsuit, negotiate a better outcome, or find the right help. Let’s walk through the four immediate things you need to do to protect your finances and your future.

First: Don't Ignore the Lawsuit

This is the golden rule. When you’re served with court papers, it’s an official legal action, and ignoring it is the worst thing you can do. If you don't respond by the court's deadline, the credit card company can ask for—and almost certainly win—a default judgment against you. This means they win automatically, without ever having to prove their case. A default judgment gives them the power to potentially garnish your wages or freeze your bank accounts. The Consumer Financial Protection Bureau stresses the importance of responding, because simply filing an answer forces the other side to prove their claims.

Gather Your Documents

Before you do anything else, find the lawsuit papers you received. This package is usually called a Summons and Complaint. Read through it carefully. It will name the company suing you (the plaintiff) and state why they believe you owe them money. Next, gather any records you have related to the debt. This could include old credit card statements, the original cardholder agreement, or any letters you’ve received from the creditor or a collection agency. Having all your paperwork in one place will help you organize your thoughts and prepare your response. Don't worry if you can't find everything; just collect what you have.

Find Your Response Deadline

Your deadline to respond is the most important date in this entire process. Look at the Summons—it will tell you exactly how many days you have to file a formal response with the court. This timeframe varies by state but is typically between 20 and 30 days from the date you were served. Find this deadline and mark it on your calendar immediately. Set reminders on your phone. Do whatever you need to do to ensure you don’t miss it. Meeting this deadline is non-negotiable, as it’s your key to participating in your own defense and avoiding that automatic default judgment.

Verify the Debt Is Yours

Just because you’ve been sued doesn’t mean the lawsuit is 100% accurate. Mistakes happen all the time. It’s the plaintiff’s job to prove that you owe the debt, that the amount is correct, and that they have the legal right to sue you for it. Look closely at the Complaint. Do you recognize the creditor and the account number? Is the amount they claim you owe accurate? Sometimes, debts are sold to third-party collectors who have incomplete or incorrect records. You have the right to make them prove their case. A great first step is to formally request proof using a debt validation letter.

How to Formally Respond to the Lawsuit

Once you’ve gathered your documents and confirmed your deadline, it’s time to take formal action. Responding to a lawsuit isn’t like replying to an email; it involves preparing and filing a specific legal document called an "Answer." This is your official opportunity to tell your side of the story to the court and the company suing you. Filing an Answer is the single most important step you can take to protect yourself from an automatic loss. It signals to the court that you are actively participating in your case and won't let the credit card company win by default. The legal system has specific rules for this process, and following them is non-negotiable. The good news is that you don't need to be a legal expert to understand them. The process has a few key steps, from writing the document to making sure the other side receives it. Getting these details right is crucial, as mistakes can jeopardize your defense. This section will walk you through exactly how to prepare and file your Answer correctly, so you can move forward with confidence.

What Is a Formal "Answer"?

A formal "Answer" is your written response to the claims made against you in the lawsuit's complaint. Think of it as a point-by-point reply. For each numbered paragraph in the complaint, you must respond by either admitting it's true, denying it's true, or stating that you don't have enough information to know if it's true. This document is your first line of defense and sets the foundation for your entire case. According to the Consumer Financial Protection Bureau, this formal response is required to prevent the court from ruling against you automatically. It’s not the place for a long story, but a structured, factual reply to the legal claims.

File Your Answer with the Court

After you’ve prepared your Answer, you need to file it with the correct court. This means taking the original document to the court clerk’s office listed on the summons. Ask the clerk to file the original and stamp your copies with the date. These date-stamped copies are your proof that you filed on time, so be sure to keep one for your records. This step officially enters your response into the court record. Failing to file with the court means that, legally, you haven't responded at all, even if you wrote the perfect Answer. It’s a simple but non-negotiable part of the process.

Include Your Affirmative Defenses

Your Answer isn't just about admitting or denying claims; it's also where you raise your "affirmative defenses." These are legal reasons why the credit card company shouldn't win the case, even if you owe the debt. For example, the debt might be too old to collect because it's past the statute of limitations, or the company suing you might not have the legal right (standing) to do so. Other common defenses include identity theft or procedural errors made by the collector. Listing these defenses in your Answer is critical because if you don't include them now, you may not be allowed to bring them up later in court.

Serve the Opposing Party

Filing your Answer with the court isn't the final step. You also have to "serve" a copy to the plaintiff—the credit card company or debt collector suing you. This means you must formally deliver a copy of your filed Answer to their attorney. This step ensures that the other side is officially notified that you are defending the lawsuit. Typically, this is done by mailing a date-stamped copy to the address listed for their lawyer on the court documents. This is a mandatory step called "service of process," and without it, your Answer may not be considered valid by the court.

Avoid These Common Filing Mistakes

The biggest mistake you can make is failing to respond at all. If you ignore the lawsuit and miss your deadline, the court will likely issue a "default judgment" against you. This means you automatically lose the case without ever getting a chance to present your side. A default judgment gives the creditor powerful tools to collect the debt, such as the ability to garnish your wages, freeze your bank accounts, or place a lien on your property. Other common mistakes include missing the filing deadline, forgetting to serve the other party, or failing to raise your affirmative defenses. Paying close attention to the rules is essential for protecting your rights.

Know Your Rights and Defenses

When you receive a lawsuit, it’s easy to feel like you’ve already lost. But that’s not the case. The company suing you—the plaintiff—has the full responsibility to prove their case. They have to show the court not only that you owe a debt, but that they are the legal owners of that debt and have the right to sue you for it. This is where your rights and defenses come into play.

A defense is a legal reason why the plaintiff shouldn’t win their case against you. You might argue that the debt is too old, that they can’t prove they own it, or that they violated your rights during the collection process. These aren't just excuses; they are formal legal arguments that you must include in your official "Answer" to the lawsuit. Raising these defenses forces the debt collector to produce evidence and follow the rules. Many times, they can’t. Understanding your options is the first step toward protecting yourself and fighting back effectively.

Is the Debt Too Old to Collect?

Every state has a law called the statute of limitations, which sets a deadline for how long a creditor can wait to sue you over a debt. This time limit, typically between three and six years, usually starts from the date of your last payment. If the credit card company or debt collector sues you after this period has expired, the debt is considered "time-barred." This is a powerful defense that can get the entire case dismissed. However, it won't happen automatically. You must raise the statute of limitations as an affirmative defense in your written Answer to the court.

Do They Have the Right to Sue You?

Often, the company suing you isn't your original credit card company. It's likely a third-party debt buyer who purchased your old debt for pennies on the dollar. Just because they say they own the debt doesn't mean they can legally prove it. To sue you, they must have "standing," which means they need a clear paper trail showing the chain of ownership from the original creditor to them. You have the right to challenge their standing and demand they produce this documentation. If they can't provide a complete and unbroken record of assignments, they may not have the legal right to collect from you.

Make Them Prove They Own the Debt

When you file a formal Answer to the lawsuit, you shift the burden of proof squarely onto the debt collector's shoulders. They can no longer rely on simply sending you letters; they now have to present actual evidence to a judge. According to the Consumer Financial Protection Bureau, the collector must prove the debt is valid and that you are the one who owes it. This simple act of responding forces them to back up their claims. Many debt buyers file lawsuits hoping you won't show up, because they often lack the detailed records needed to win a contested case.

Challenge Their Lack of Evidence

What kind of proof does a debt collector need? To win their case, they should be able to produce key documents, including the original signed credit card agreement, a complete history of monthly statements, and proof that you accepted the terms. For debt buyers, this is often a huge hurdle. They frequently buy debts in bulk with very little supporting paperwork. If they can't provide these essential documents, you can argue that they haven't met their burden of proof. Pointing out their lack of evidence is a core part of a strong defense.

Your Debt Validation Rights Under Federal Law

The Fair Debt Collection Practices Act (FDCPA) is a federal law that gives you powerful consumer protections. One of the most important is your right to request debt validation. You can formally ask the debt collector to provide proof that you owe the debt and that the amount is correct. While this is often done before a lawsuit, you can still assert your rights during the legal process. If the collector can't provide proper validation, they may be required to stop collection efforts, which could include dismissing the lawsuit against you.

Was the Lawsuit Served Correctly?

For a lawsuit to be valid, you must be officially notified in a very specific way. This process is called "service of process," and the rules for it vary by state. Generally, it means someone must personally hand you the court summons and complaint, or follow another legally approved method. If the debt collector failed to follow these strict rules—for example, by leaving the papers with a neighbor, mailing them to an old address, or filing in the wrong court—you can ask the judge to dismiss the case for improper service. This is a technical defense, but it's a valid one.

Should You Settle or Fight in Court?

After you’ve been sued, you’ll face a big decision: should you try to settle the debt or fight the lawsuit in court? There’s no single right answer—the best path depends entirely on your situation. Settling involves negotiating with the credit card company or debt collector to pay a smaller amount than they claim you owe in exchange for them dropping the lawsuit. Fighting means you formally respond to the lawsuit and challenge their claims in court.

Many people assume they have to pick one or the other right away, but that’s not the case. Filing a formal Answer to the lawsuit is a crucial first step that protects your rights and keeps all your options on the table. It prevents the collector from getting an automatic win while giving you the time and leverage to decide what to do next. You can still negotiate a settlement even after you’ve filed your response.

Deciding Between Settling and Fighting

If you know the debt is yours and the amount is correct, but you can’t afford to pay the full balance, settling can be a smart move. Creditors and debt collectors often prefer to settle out of court because it saves them time and legal fees. They get some of their money back without the uncertainty of a trial. For you, it means resolving the issue for less than you owe and avoiding a judgment on your record.

However, if you think there’s an error—maybe the debt isn’t yours, the amount is wrong, or it’s too old to be collected—then fighting the lawsuit is essential. By filing an Answer, you force the collector to prove their case. They must provide evidence that you owe the debt and that they have the legal right to sue you for it. You might be surprised how often they can’t produce the necessary paperwork, which could lead to the case being dismissed.

How to Start Settlement Talks Safely

You can begin settlement negotiations at any point in the process. The simplest way to start is to call the attorney or law firm that filed the lawsuit against you. Their contact information will be on the court documents you received. When you call, you can state that you received the lawsuit and would like to discuss resolving the matter.

You can make an offer to pay a smaller, lump-sum amount to close the account and have the lawsuit dismissed. It’s best to start with a low but reasonable offer, as they will likely counter with a higher number. Remember, this is a negotiation. Stay calm and professional, and don’t feel pressured to agree to anything on the spot. It’s perfectly fine to say you need time to think about their offer before making a decision.

Negotiate for a Lower Amount

When you negotiate, aim to settle for a single, lump-sum payment if you can. While some collectors might offer a payment plan, these can be risky. In some states, agreeing to a payment plan can "reset" the statute of limitations on the debt. This means if you miss a payment, the clock starts over, and they can sue you again. A one-time payment is cleaner and finalizes the deal immediately.

Having the cash on hand for a lump-sum payment also gives you more leverage. A collector is more likely to accept a lower amount if they know they’ll get the money right away. Start by offering a fraction of what you owe—say, 25% or 30%—and be prepared to negotiate up from there. Don’t reveal your top number at the beginning. The goal is to find a number that you can afford and that they are willing to accept to close the case.

Always Get the Agreement in Writing

This is the most important rule of settling a debt: do not send any money until you have a signed settlement agreement. A verbal promise from a debt collector is not enough to protect you. The Consumer Financial Protection Bureau stresses that you should always get any settlement agreement in writing. This document is your proof that the debt has been resolved.

The written agreement should clearly state the amount you’ve agreed to pay, the date it’s due, and that this payment will satisfy the debt in full. Most importantly, it must state that the creditor or collector agrees to dismiss the lawsuit with prejudice, which means they can’t sue you for the same debt again. Review the document carefully, and only after you have a copy signed by both you and the collector should you make the payment.

What to Know About Taxes on Settled Debt

One final thing to keep in mind is the potential tax implications of settling a debt. If a creditor forgives $600 or more of your debt, they are generally required to file a Form 1099-C, Cancellation of Debt, with the IRS. When this happens, the forgiven amount may be considered taxable income by the IRS.

For example, if you owed $5,000 and settled for $2,000, the forgiven $3,000 could be added to your income for the year, and you might have to pay taxes on it. This isn't a reason to avoid a good settlement, but it’s something you need to be aware of so you aren’t surprised during tax season. There are some exceptions, such as insolvency, that might exclude you from paying taxes on the forgiven debt. If you receive a 1099-C, it’s a good idea to talk with a tax professional.

Ignoring the Lawsuit? Here's What Happens (and How to Get Help)

Getting sued is stressful, and it’s tempting to ignore the papers and hope the problem disappears. But when it comes to a debt collection lawsuit, doing nothing is the one move you can’t afford to make. Ignoring the suit doesn’t stop the process; it just removes you from it, giving the company suing you a clear path to win. The good news is that you have options, and taking action is more straightforward than you might think. Responding to the lawsuit protects your rights and puts you back in control of the situation. Let’s walk through what happens if you don’t respond and how you can get the help you need to fight back.

The Risk of a Default Judgment

If you don’t respond to the lawsuit by the court’s deadline, the credit card company will ask the judge for a default judgment. Think of it as winning a game because the other team didn’t show up. The court assumes the debt collector's claims are true because you didn’t contest them. A default judgment is a legally binding ruling that says you owe the debt, often including extra interest, court costs, and the collector’s attorney fees. Once a judgment is entered, it’s very difficult and expensive to reverse. It becomes an official court order that gives the creditor powerful tools to collect money from you.

Can They Garnish Your Wages or Seize Your Accounts?

Yes, and this is where a default judgment gets serious. With a court judgment in hand, a creditor can legally take money directly from your paycheck—a process called wage garnishment. They can also freeze your bank account and take funds to satisfy the debt. The amount they can take varies by state, but it can be a significant portion of your income, making it hard to cover basic expenses like rent and groceries. This isn't just a possibility; it's the standard next step for collectors after they win a default judgment. Ignoring the lawsuit is the surest way to end up in this situation, which is why filing a response is so critical to protecting your finances.

Attorney vs. Legal Tech: Which Is Right for You?

When you decide to respond, you have two main paths for getting help: hiring a traditional attorney or using a legal technology platform. An attorney can offer personalized legal advice and represent you in court, which can be invaluable, especially for complex cases. However, the cost can be a major barrier, with legal fees often running into thousands of dollars. For many people, that’s simply not realistic. This is where legal tech comes in. Platforms like LawLaw are designed to make legal help accessible and affordable. They provide tools to help you generate and file the necessary court documents on your own, giving you a fighting chance without the high cost of a lawyer.

How LawLaw Helps You Respond

LawLaw was created to solve this exact problem. We believe everyone deserves to defend themselves, regardless of their budget. Our platform makes responding to a debt lawsuit easy, simple, and affordable. Instead of figuring out complex legal forms by yourself, you answer a straightforward set of questions online. Our system then uses your answers to generate a formal "Answer" document, which is the official response you need to file with the court. We even handle filing the documents for you. This process ensures you meet your deadline and formally deny the credit card company’s claims, forcing them to prove their case. You can prepare your official response in minutes.

What Legal Tech Can (and Can't) Do

Legal technology is a powerful tool that empowers you to stand up to debt collectors. Many collectors buy old debts for pennies on the dollar and often lack the complete paperwork needed to win in court if challenged. By filing an Answer, you force them to produce this evidence. This simple act can sometimes lead them to drop the case or offer a much lower settlement because going to trial is expensive and risky for them. It’s important to understand that legal tech platforms provide tools and information, not legal advice or in-court representation. But for most debt collection cases, a strong, timely response is the most important step you can take, and that’s exactly what we help you do.

Related Articles

• Getting Sued by a Credit Card Company: What to Do Next
• Credit Card Civil Suit Guide
• What Happens When a Credit Card Company Sues You?
• Sued by a Credit Card Company? Your Rights and Options

Frequently Asked Questions

What if I know I owe the money? Should I still file a response? Yes, absolutely. Filing an Answer is critical even if you believe the debt is yours. Responding forces the company suing you to legally prove they have the right to collect the debt and that the amount is accurate—mistakes are more common than you'd think. It also protects you from an automatic default judgment, which keeps your options open for negotiating a settlement or identifying other defenses you might not have known you had.

Does filing an Answer mean I have to go to court and argue with a judge? Not necessarily. Filing an Answer is the first formal step in the legal process, not the last. For many people, it's the only major step they need to take. Once you've responded, the case enters a phase where you can negotiate a settlement or the other side might even drop the case if they can't produce the right paperwork. Many debt collection lawsuits are resolved long before they ever reach a courtroom trial.

I missed my deadline to respond. Is it too late for me to do anything? Missing the deadline is serious because it allows the creditor to request a default judgment against you, but you shouldn't give up. Depending on your state and how much time has passed, you might still have options to challenge the judgment. This process is more complex than filing an initial Answer, so you need to act immediately. The key is to not delay any further, as your chances of fixing the situation decrease with every day that goes by.

Can I really handle this without hiring an expensive lawyer? For many debt collection lawsuits, the most important part is filing a timely and correctly formatted Answer with the right defenses. You don't always need a lawyer for this step. Services like LawLaw are designed to help you create and file these essential documents affordably. While an attorney is the best choice for very complex cases, using a legal tech platform can be a powerful and realistic way to protect your rights when high legal fees are a barrier.

If I want to settle the debt, should I wait to file my Answer? No, you should never wait. Always file your Answer before the deadline, even if you plan to negotiate a settlement. Filing your response protects you from a default judgment while you have those conversations. In fact, having an official response on file can give you more leverage in negotiations because it shows the collector you are serious about defending yourself and won't be an easy win for them.