What to Do When a Credit Card Company Sues You

Every year, 4.7 million Americans are sued for debt, and a staggering 70-90% of them lose automatically. They don't lose because the case against them is strong; they lose because they never file a response. When you don't answer a lawsuit, the court can issue a default judgment, giving the collector the power to garnish your wages or freeze your bank account. Don't become part of that statistic. This guide will show you exactly what to do when a credit card company sues you so you can avoid an automatic loss. Responding is your legal right, and it forces the collector to actually prove their case. We’ll break down the process into simple, manageable steps to help you fight back.

Key Takeaways

• Ignoring the Lawsuit Guarantees a Loss: The single biggest mistake you can make is doing nothing. Failing to file a formal Answer by your deadline results in a default judgment—an automatic win for the collector that lets them garnish your wages or seize bank funds.
• The Burden of Proof Is on the Collector: The company suing you has the legal responsibility to prove you owe the debt. Responding to the lawsuit forces them to produce evidence and allows you to use powerful defenses, like an expired statute of limitations, to challenge their case.
• A Formal Response Creates Negotiation Power: Filing an Answer is a strategic move that signals you're prepared to fight. This often makes collectors more willing to settle the debt out of court for a lower amount, giving you a path to resolve the issue on better terms.

What Happens When a Credit Card Company Sues You?

Getting official court papers in the mail is a stressful experience. It’s tempting to set them aside and hope the problem goes away, but that’s the worst thing you can do. When a credit card company or a debt collector sues you, they’ve started a formal legal process. You have a limited time to respond, and ignoring it has serious consequences.

If you don’t file a formal response with the court by the deadline, the creditor will almost certainly ask for—and win—a default judgment against you. A default judgment is essentially an automatic loss. The court rules in favor of the creditor without hearing your side of the story, simply because you didn't answer the lawsuit.

A default judgment is more than just a legal document; it’s a powerful tool that gives the creditor the legal right to collect the debt from you. They can get a court order to garnish your wages, which means taking money directly from your paycheck. They can also freeze your bank accounts and take the funds inside, or even place a lien on your property, like your home or car.

On top of the original debt, the judgment will likely include added interest, court fees, and the creditor’s legal costs, causing the amount you owe to grow. These judgments can follow you for a long time, often for a decade or more, and can even be renewed. Responding to the lawsuit is your chance to prevent this from happening and protect your rights.

Sued for Credit Card Debt? Here Are Your First Steps

Getting a lawsuit in the mail is a deeply stressful experience. Your first instinct might be to panic or to hide the envelope in a drawer and forget about it. Take a deep breath. While this is serious, it’s a situation you can manage by taking clear, deliberate steps. The key is to act quickly and strategically. Let’s walk through the first three things you need to do right away.

Don't Panic—But Don't Ignore It

It’s completely normal to feel overwhelmed, but the single worst thing you can do is ignore the lawsuit. When you don't respond, the company suing you can ask the court for a default judgment. This means they win automatically because you didn't show up to defend yourself. Responding to the lawsuit is your official way of telling the court, "I disagree," and it forces the debt collector to actually prove their case. By taking action, you are protecting your rights and giving yourself a fighting chance. Think of it not as a confrontation, but as the first step in taking back control of the situation.

Find and Calculate Your Deadline

The first document you should look for in the packet you received is the Summons. This legal paper officially notifies you of the lawsuit and, most importantly, tells you how much time you have to file a formal response with the court. This deadline is non-negotiable. The exact amount of time you have varies significantly by state and even by the specific court handling your case—it could be anywhere from 14 to 30 days. Carefully read the Summons to find this timeframe, then get out a calendar and mark the exact date your response is due. Missing this deadline can lead to that automatic loss we just talked about.

Gather Your Documents

Now that you know your deadline, it’s time to get organized. Carefully read through all the lawsuit papers, especially the Complaint. This document outlines who is suing you (the plaintiff), why they are suing you, and exactly how much money they claim you owe. As you read, start gathering any records you have related to this debt. This includes the lawsuit papers themselves, any past letters or notices from the original creditor or the debt collector, and any of your own bank or credit card statements that show payments or other activity on the account. This paperwork is your evidence, and it will be essential for preparing your response.

Why You Must Respond to the Lawsuit

When you’re served with a lawsuit, your first instinct might be to ignore it and hope it goes away. This is the single biggest mistake you can make. Every year, 4.7 million Americans are sued for debt, and a staggering 70-90% of them lose automatically simply because they never file a response.

Ignoring the lawsuit doesn't make it disappear. Instead, it hands the debt collector an easy, automatic win. By not responding, you give up your right to challenge the debt, question the amount owed, or defend yourself in court. The most critical thing you can do right now is file a formal response before your deadline. This simple action forces the debt collector to prove their case and protects you from the serious financial consequences that come with losing by default.

What Is a Default Judgment?

Think of a lawsuit as a conversation with the court. The debt collector starts the conversation by filing a complaint, and you continue it by filing your Answer. If you stay silent, the court assumes you agree with everything the collector has said. When that happens, the judge can enter a “default judgment” against you without ever hearing your side of the story.

A default judgment is a legal ruling that says you owe the debt. It’s an official court order, not just another collection letter. It means you’ve legally lost the case, and the collector now has the court’s permission to use powerful tools to collect the money from you.

How a Default Judgment Hurts Your Finances

Once a debt collector has a default judgment, they have more leverage than ever before. A judgment gives them the legal right to take aggressive collection actions that can seriously damage your financial stability. According to the Consumer Financial Protection Bureau, a judgment can allow a creditor to:

• Garnish your wages, taking money directly from your paycheck before you even see it.
• Freeze or seize funds from your bank account, often without any warning.
• Place a lien on your property, like your home, which can prevent you from selling or refinancing it until the debt is paid.

On top of the original debt, the judgment can also include added interest, court costs, and the collector’s attorney fees, causing the amount you owe to swell significantly.

How Much Time Do You Have to Answer the Lawsuit?

When you’re sued, the clock starts ticking immediately. The most important piece of information in your lawsuit papers is the deadline to respond. This isn't a suggestion; it's a hard deadline set by the court. Typically, you have between 14 and 30 days to file a formal Answer, but this window can change dramatically depending on where you live.

Ignoring this deadline is the single biggest mistake you can make. The debt collector is counting on you to miss it. Every year, millions of Americans are sued for debt, and a staggering 70-90% of them don't respond, leading to an automatic loss. Don't become part of that statistic. Taking action within your deadline is the first and most critical step to protecting your rights and your finances.

Know Your State's Specific Deadline

The exact amount of time you have to respond to a lawsuit is determined by state and local court rules. There is no single, nationwide deadline. For example, in Virginia's Circuit Court, you might have 21 days to respond, while in its General District Court, you might be required to show up in court on a specific date. Because the rules vary so much, you must read the summons and complaint documents carefully. The deadline will be stated clearly on those papers. Find it, circle it, and write it on your calendar immediately.

What Happens If You Miss the Deadline?

If you don't file an Answer by the deadline, the court can issue a decision against you without ever hearing your side of the story. This is called a default judgment. A default judgment is an automatic win for the debt collector, giving them powerful legal tools to collect the money. They can garnish your wages, freeze the money in your bank account, or even place a lien on your property. The original debt can also swell with added interest, court fees, and the collector’s attorney costs. Responding on time is your only way to prevent this from happening and fight back.

How to Answer a Credit Card Lawsuit, Step-by-Step

Responding to a lawsuit can feel overwhelming, but it’s a process you can manage one step at a time. The most important document you’ll create is your official "Answer." This is your chance to formally tell the court and the person suing you that you are ready to defend yourself. Filing an Answer is the single most important action you can take to protect your rights and prevent the court from automatically ruling against you. Let’s walk through what this document is and how to get it filed correctly.

What Is an "Answer" Document?

An Answer is a formal legal document that you file with the court to respond to the claims made against you in a lawsuit. Think of it as your official entry into the case. According to the Consumer Financial Protection Bureau, it's critical to respond to the lawsuit by the deadline listed in your court papers. Filing an Answer doesn't mean you’re admitting you owe the money. It simply tells the court that you disagree with the lawsuit and intend to fight it. By responding, you force the debt collector to prove their case, which is a fundamental part of protecting your rights.

What to Include in Your Answer

Your Answer document needs to do two main things. First, you must respond to every single allegation listed in the Complaint (the document that started the lawsuit). For each point, you’ll state whether you "admit," "deny," or "lack sufficient knowledge" to respond. Second, you will list your "affirmative defenses." These are specific legal reasons why the credit card company shouldn't win the case. Common defenses include the debt being past the statute of limitations or the amount being incorrect. LawLaw’s platform helps you create a customized Answer to a Lawsuit with the proper affirmative defenses for your specific situation.

How to File Your Answer with the Court

Once your Answer is prepared, you must file it with the correct court and send a copy to the lawyer who sued you—a process called "service." Every court has its own specific rules for formatting, filing fees, and submission methods, so it’s important to follow them exactly. Most importantly, you must file before your deadline, which is often between 14 and 30 days from when you received the lawsuit. Missing this deadline can lead to an automatic loss. To avoid any missteps, you can use a service that researches your court’s local rules, calculates any fees, and files the documents for you, ensuring everything is done correctly and on time.

How to Make the Collector Prove You Owe the Debt

A lawsuit is an accusation, not a fact. The company suing you has the legal responsibility—what’s called the "burden of proof"—to prove its case. They must show the court that a debt exists, that you owe it, and that they have the legal right to collect it. This is a critical advantage for you, as many debt collectors work with incomplete records. By formally asking them to provide proof, you are exercising your rights and forcing them to do their job. This single step can completely change the direction of your case.

Your Right to Ask for Proof (Debt Validation)

When a debt collector sues you, you have a legal right to challenge them to prove their claim. This process is called debt validation, and it’s your chance to formally request the evidence that backs up their lawsuit. The Consumer Financial Protection Bureau confirms that if you respond to the lawsuit, the collector must show the court the debt is real and that you owe it. This is a fundamental part of your defense that forces the collector to put their cards on the table. You can start this process by sending a formal letter, which you can create with LawLaw's free Debt Validation Letter Generator.

What Proof to Ask For

So, what kind of proof should you ask for? It’s important to be specific. Don’t just ask if they have proof; demand the actual documents. According to CBS News, you should request key items like the original credit agreement you signed, a complete history of account statements, and proof they have the legal authority to sue you. This last part is crucial if your debt was sold to a third-party collector. You need to see the "chain of title"—the paper trail showing how the debt got from the original creditor to the company suing you. Without it, their claim is just an assertion.

How Debt Validation Can Help Your Case

Requesting debt validation can significantly strengthen your defense. Debt collectors often file thousands of lawsuits at once, hoping people won't respond, because they frequently lack the specific paperwork to win in court if challenged. As one person on Reddit noted, collectors often don't have detailed proof of the original charges. If the collector can't produce the original contract or prove they legally own the debt, their case may be dismissed. At a minimum, it puts you in a much stronger position to negotiate a favorable settlement. Responding is the first step to protecting your finances.

What Are Your Legal Rights and Defenses?

When you’re sued, it’s easy to feel like you’re on the back foot, but you have more power than you think. The law gives you specific rights and potential defenses to challenge the lawsuit. The company suing you—the plaintiff—has the burden of proof. They have to convince the court that their claim is valid, that you owe the debt, and that they have the legal right to collect it. Understanding your rights is the first step toward building a strong response and protecting your finances. It’s not just about owing money; it’s about whether the collector can legally prove their case according to the rules.

Know Your Rights Under Federal Law

Federal laws like the Fair Debt Collection Practices Act (FDCPA) exist to protect you from unfair or deceptive collection practices. A key right under this law is your ability to demand proof that you actually owe the debt. The collector can’t just say you owe money; they have to provide documentation to back up their claim. This is called debt validation. If they can’t produce the original contract or a clear history of the account, their case gets much weaker. You can formally request this proof, and it’s often a powerful first move. It forces the collector to show their cards and can sometimes reveal that they don’t have the evidence needed to win in court.

Is the Debt Too Old to Collect? (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 an unpaid debt. This clock usually starts ticking from the date of your last payment. For credit card debt, the limit is typically between three and six years, but it varies significantly by state. If the statute of limitations has expired, the debt is considered "time-barred." While a collector can still try to collect on it, they can no longer win a lawsuit against you if you show up in court and raise this defense. Checking your state’s statute of limitations is one of the most important things you can do, as it could be a complete defense to the lawsuit.

Common Defenses to Fight a Credit Card Lawsuit

Besides the statute of limitations, you may have other defenses you can raise in your official Answer to the lawsuit. An "affirmative defense" is a reason why the collector shouldn't win, even if you do owe the money. For example, did they sue the wrong person? Is the amount they’re claiming incorrect? Do you have proof that you already paid or settled this debt? Another common defense is that the company suing you can’t prove it has the legal right to collect the debt (called "lack of standing"). LawLaw’s platform helps you identify and include the right affirmative defenses in your legal documents, ensuring your response is as strong as possible. You don’t have to be a legal expert to use these defenses to protect yourself.

Can You Settle the Lawsuit Out of Court?

Even after a lawsuit is filed, the door to negotiation isn't closed. In fact, this is often when both sides are most motivated to find a middle ground. The creditor or debt collector wants to avoid the time and expense of a court battle, and you want to resolve the debt and avoid a judgment. Settling out of court is a common outcome in debt collection lawsuits, and it can give you a chance to pay less than the original amount claimed. It puts you back in control of the situation, allowing you to find a solution that works for your budget.

How to Negotiate a Settlement

Negotiating a settlement means reaching an agreement with the plaintiff (the party suing you) to resolve the lawsuit for a certain amount of money. You can start this process at any point, but it’s often best to do it after you’ve filed your official Answer to the lawsuit. This shows them you’re serious about defending your rights. You can work out a deal by contacting the attorney or law firm listed on the lawsuit papers. Your goal is to agree on a payment—either a single lump sum or a series of monthly payments—that is less than what they claim you owe. In exchange, they agree to drop the lawsuit.

Tips for a Successful Negotiation

Heading into a negotiation can feel daunting, but a little preparation goes a long way. First, review your finances and decide what you can realistically afford to pay. Don't offer more than you can handle. When you make your first offer, start low. Debt collectors often purchase debts for a fraction of their face value, so they usually have room to negotiate. For example, if the lawsuit is for $2,000, you might offer to pay 50% or 60% of that as a lump sum. A single, upfront payment is often more appealing to them than a payment plan, which could get you a steeper discount. Stay calm and professional during the conversation, and be prepared to go back and forth a few times to reach a number that works for everyone.

Always Get Your Settlement Agreement in Writing

This is the most important rule of settling a debt: do not send any money until you have a signed, written agreement. A verbal promise isn't enough to protect you. A proper settlement agreement in writing should clearly state the exact amount you will pay, the payment schedule, and that this payment will satisfy the debt in full. Crucially, it must also state that the collector agrees to dismiss the lawsuit against you "with prejudice." This legal term means they are dropping the case permanently and cannot sue you for the same debt again. Review the document carefully before signing, and don't be afraid to ask for changes if something isn't clear.

Should You Handle This Yourself or Get Help?

Once you’ve been served with a lawsuit, you face a critical decision: should you try to handle this on your own, or should you get help? The answer depends on your comfort level with legal documents, your budget, and how much time you can dedicate to your case. Doing nothing, however, is not an option. Ignoring the lawsuit almost guarantees a default judgment against you, which means the collector wins automatically.

The reality is that most people in this situation don't respond. Every year, 4.7 million Americans are sued for debt, and an estimated 70-90% of them lose by default simply because they never file an Answer. The legal system can feel intimidating, and the cost of hiring an attorney can seem out of reach. But you have more options than you think. The most important thing is to make a conscious choice about how you’ll move forward and to take action before your deadline passes.

DIY vs. Getting Help: Pros and Cons

Going it alone might seem like the best way to save money, but it comes with significant risks. Court procedures are strict, and legal documents have specific formatting and content requirements. If you make a mistake in your Answer or miss your filing deadline, the court can reject your response and issue a default judgment. Managing the process yourself also requires a major investment of time and energy, adding more stress to an already difficult situation.

On the other hand, hiring a traditional debt collection attorney provides you with expert guidance. A lawyer can manage the entire process, from drafting your Answer to negotiating with the creditor. The downside is the cost, which can run from $1,500 to $5,000. For many people facing a debt lawsuit, that price is simply not feasible. As the Consumer Financial Protection Bureau (CFPB) advises, it's always a good idea to talk to a lawyer, but you need to weigh the high cost against the amount of the debt.

Find Affordable Alternatives to a Lawyer

If the cost of a lawyer is your main concern, don’t lose hope. You have other options that can provide the help you need at a fraction of the price. Some attorneys offer free consultations or low-cost services, and you can search for local legal aid clinics that may be able to assist you for free if you qualify. The Legal Services Corporation is a great resource for finding free legal aid in your area.

Another powerful option is using a legal technology platform. These services use attorney-reviewed software to help you create and file the necessary legal documents to respond to your lawsuit. They bridge the gap between going it alone and hiring an expensive lawyer. At LawLaw, we designed a service to help you prepare and file your official Answer document correctly and on time. Our goal is to make it easy, simple, and affordable to stand up to debt collectors and protect your rights.

Common Mistakes to Avoid When You're Sued

When you’re facing a lawsuit, the stress can make it easy to stumble. But knowing the most common pitfalls is the first step to protecting yourself. The good news is that these mistakes are entirely avoidable once you know what to look for. Let's walk through the four biggest missteps people make when sued for credit card debt and how you can steer clear of them.

Mistake #1: Ignoring the Lawsuit

The single biggest mistake you can make is pretending the lawsuit doesn't exist. It’s tempting to put the scary-looking documents aside, but they won’t go away on their own. If you don't respond by the court's deadline, the company suing you can ask for—and almost always get—a default judgment against you. This is a court order that says you automatically lose the case. A default judgment gives the creditor powerful tools to collect the debt, including the ability to garnish your wages, freeze your bank accounts, or even place a lien on your property. Ignoring the problem only makes it worse and takes away your power to fight back.

Mistake #2: Admitting You Owe the Debt

When you file your official Answer with the court, be careful with your words. Many people assume that because they are responding, they have to admit the debt is theirs. That’s not true. According to the Consumer Financial Protection Bureau, responding to a lawsuit doesn't mean you agree that you owe the debt or that the amount is correct. The burden of proof is on the debt collector to prove their case. They have to show that you owe the specific amount they’re claiming and that they have the legal right to collect it. Admitting the debt upfront makes their job much easier and can weaken your ability to negotiate or defend yourself later.

Mistake #3: Missing Your Deadline

In the legal world, deadlines are everything. When you receive a summons and complaint, the documents will state how much time you have to file a formal response with the court. This window is usually short—typically between 14 and 30 days, depending on your state's rules. If you miss this deadline, you lose your chance to tell your side of the story. The court can issue a default judgment against you simply because you failed to respond in time. Calculating your deadline correctly and filing your Answer before it passes is one of the most critical steps in the entire process. It keeps you in the game and preserves your legal rights.

Mistake #4: Not Keeping Your Paperwork

From the moment you receive the lawsuit, get organized. Keep every single piece of paper related to the debt and the case in one place. This includes the summons and complaint, any letters from the creditor or their attorneys, and any of your own records, like old credit card statements or proof of payments. Read the lawsuit papers carefully to understand who is suing you, the exact amount they claim you owe, and your deadline to respond. Good documentation is your best tool. It helps you build your defense, spot errors in the collector’s claims, and stay on top of important dates. Don’t rely on memory—keep a file for everything.

What Happens After You File Your Response?

First, take a deep breath. By filing an Answer to the lawsuit, you’ve already taken a massive step toward protecting your rights. You’ve avoided an automatic loss and put the ball back in the debt collector’s court. Instead of the case being over, it’s just beginning, and now you have a say in what happens next. The legal process can seem intimidating, but it often opens the door to better outcomes, like getting the case dismissed or negotiating a settlement you can actually afford. Now, the person suing you has to decide if they have enough evidence to proceed and if it’s worth their time and money to keep fighting.

What Are the Next Steps in the Lawsuit?

After you file your Answer, the lawsuit officially enters a new phase. The court will set a schedule for how the case will move forward, which often includes a period called "discovery." This is when both sides can request information from each other to build their case. The debt collector now has the burden of proof—they must legally prove to the court that the debt is valid, the amount is correct, and you are the person who owes it. Simply filing your response forces them to produce documents and evidence they might not have. Many collection lawsuits rely on people not showing up, so your action completely changes the game.

Getting Ready to Talk Settlement

Filing a response often creates the perfect opportunity to negotiate. Since you’ve shown you’re ready to fight the lawsuit, the debt collector may be more willing to work out a deal rather than spend more money on legal fees. A settlement could involve paying a smaller, lump-sum amount to close the account or setting up a manageable payment plan. Having a solid response on file gives you leverage. You aren't just asking them for a deal; you are negotiating from a position of strength because you’ve met your legal obligations and are prepared for the next steps in court.

How to Protect Your Rights Going Forward

The single most important thing you did was respond. By doing so, you prevented a default judgment, which is what happens when the court rules against you simply because you didn't show up. A default judgment can lead to wage garnishment and frozen bank accounts. By continuing to participate in the process, you keep all your options open. You can challenge the collector’s evidence, present your own defenses, and negotiate a fair settlement. LawLaw was built to help you take this crucial first step, ensuring you can respond to a debt lawsuit correctly and confidently, protecting your finances and your future.

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's the worst that can happen if I just ignore the lawsuit? Ignoring the lawsuit is the most damaging thing you can do. The court will likely issue a default judgment against you, which is an automatic loss. This gives the creditor the legal power to take money directly from your paycheck through wage garnishment, freeze your bank accounts, or even place a lien on your property. The original debt can also grow larger with added interest and legal fees.

Can I just call the debt collector to settle instead of filing a response? While settling is a great option, you should always file your official Answer with the court first. Filing your response shows the collector you are serious about defending yourself and prevents them from getting an easy default judgment while you're trying to negotiate. It puts you in a much stronger bargaining position and protects your rights throughout the process.

What if I know I owe some money, but I don't think the amount is right? This is a very common situation and a perfect reason to file an Answer. The company suing you has the "burden of proof," meaning they must prove to the court that you owe the exact amount they are claiming. By responding to the lawsuit, you force them to provide detailed documentation, which can reveal errors in their calculations or added fees you don't actually owe.

Is using a service to file my Answer the same as hiring a lawyer? No, they are different. A service like LawLaw provides tools to help you create and file the necessary legal documents to represent yourself, which is a powerful and affordable option. A lawyer, on the other hand, provides legal advice and can represent you in court. Our service is designed to give you the resources to respond correctly without the high cost of full legal representation.

How do I know my exact deadline to respond? Your specific deadline will be clearly stated in the court documents you received, usually on a paper called the Summons. This timeframe is set by your state and local court rules and is typically between 14 and 30 days. It is essential to find this date immediately, mark it on your calendar, and file your response before it passes.