How to Settle Credit Card Debt When a Lawsuit Has Been Filed (2024)

Table of Contents
Settle credit card debt. What happens to unpaid debts when a lawsuit is filed Debt collection lawsuits and the statute of limitations Initial actions in a lawsuit State of limitations Options for settling a credit card debt File the Answer Send a Debt Lawsuit Settlement Letter Offer a lump sum payment Here are SoloSuit's basic tips and tricks for negotiating a debt settlement: Effects of settling a debt No one is 'judgment proof' What is SoloSuit? Settle with SoloSettle Negotiate settlement if you're being sued by credit card company How to Answer a Summons for debt collection in all 50 states Guides on how to resolve debt with every debt collector Resolve your debt with your creditor Settle your medical debt Guides on arbitration Stop calls from debt collectors Federal debt collection laws can protect you Get debt relief in your state Debt collection laws in all 50 states Statute of limitations on debt state guides Check the status of your court case How to stop wage garnishment in your state Other wage garnishment resources How to settle a debt in your state How to settle with every debt collector Other debt settlement resources Personal loan and debt relief reviews How to repair and improve your credit score How to resolve student loan debt Civil law legal definitions Get answers to these FAQs on debt collection How-to debt guides Learn more with these additional debt resources FAQs

George Simons | March 27, 2024

How to Settle Credit Card Debt When a Lawsuit Has Been Filed (1)

Co-Founder of SoloSuit
George Simons, JD/MBA

George Simons is the co-founder and CEO of SoloSuit. He has helped Americans protect over $1 billion from predatory debt lawsuits. George graduated from BYU Law school in 2020 with a JD-MBA. In his spare time, George likes to cook, because he likes to eat.

Edited by Hannah Locklear

How to Settle Credit Card Debt When a Lawsuit Has Been Filed (2)

Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

How to Settle Credit Card Debt When a Lawsuit Has Been Filed (3)

Summary: Are you being sued for credit card debt? Wondering if you can settle and make the lawsuit go away? Learn what you should do when you're being sued but still want to settle your debts.

You may feel overwhelmed and scared when you are served with a lawsuit, especially if it's for unpaid debts. If you are facing challenges with your unpaid debts, it's important to know that you are not alone. You have options. Even if you have been sued, you still may be able to resolve the issue.

Settle credit card debt.

You can negotiate debt settlement at any stage of the collections process, even after you've been sued by a credit card company. SoloSettle makes it easy.

Settle with SoloSettle


What happens to unpaid debts when a lawsuit is filed

When you can no longer make payments on your credit card, the creditor will attempt to collect on the balance. It will probably send you an email, text, or letter. You'll also receive phone calls from the creditor as soon as you start missing payments. Once you are more than three months past due, the creditor may hire a debt collector or law firm to collect the debt. It also can sell the debt to a national debt collector.

After you miss several months of payments, the odds are that the creditor will sell the debt to a debt collections agency. Your account will say it was charged off, and it will damage your credit score. The debt collector who bought the debt will try to collect what you owe. If you do not respond to their collection efforts, a lawsuit could be filed against you. Unpaid debts will not go away, no matter your reason for not paying.

SoloSuit can help you respond to the lawsuit and settle the debt with the collector.

Debt collection lawsuits and the statute of limitations

Initial actions in a lawsuit

Debt collection lawsuits begin when the creditor/debt collector files the Summons and Complaint documents in court and serves you with a copy. The Summons is a legal document notifying you that you're being sued, and the Complaint outlines the specific allegations against you (i.e. the exact amount you owe). You have 14-30 days to respond to the Summons and Complaint, depending on which state you're being sued in.

The worst thing to do is to ignore the Summons and Complaint. Here's why.

See Also
6 Effective Ways to Pay off Your Credit Card Debt FasterWhat Happens to an Unpaid Credit Card Debt After 7 Years?How to Pay Off Debt Listed on Your Credit Report - ExperianDebt Settlement: A Guide for Negotiation

Failure to respond to the lawsuit can result in a default judgment against you. If the court orders a default judgment, then the creditor/collector has the legal right to garnish your wages, put liens on your property, among other things.

SoloSuit can help you file an Answer in all 50 states.

State of limitations

There is only so much time that the creditor can file a lawsuit to collect debts. This is known as the statute of limitations, which differs in each state as well. The statute of limitations prevents collectors from suing people for super old debt.

If the collector tries to file suit against you after the statute of limitations has passed, then you can use it as an affirmative defense in the lawsuit. There are several other affirmative defenses you can list in your Answer that will strengthen your case.

SoloSuit can help you make the right affirmative defenses to help you win your case.

Options for settling a credit card debt

The good news is that you have several options if you've been sued for a credit card debt, so never give up hope! Here are some routes you can take to improve your chances of settling the debt:

  • File the Answer
  • Send a Debt Lawsuit Settlement Letter
  • Offer a lump sum payment
  • Pay the debt in full (not ideal)

File the Answer

Like we mentioned before, the first and most important part of reaching a settlement in a debt lawsuit is filing your Answer.

Even if you've reached a settlement with the collector, you should still file an Answer with the court. Collectors can be sneaky and request a default judgment after reaching a payment agreement with you. If the court does not have your Answer on file, and you have no way to prove that a settlement was reached, the collector can always ask for a default. This is why it is so important to always, always file the Answer first.

You can draft your Answer with SoloSuit's help in minutes, for free!

Send a Debt Lawsuit Settlement Letter

You can resolve your debt after the suit is filed by usingSoloSettle.

After filing your Answer into the case, you should begin the process of negotiating a settlement. Most creditors/collectors want to reach a settlement, and they will often settle for less than the amount you actually owe.

You should wait about 20-30 days after you've filed your Answer to send the settlement letter, before the collector makes any other moves in court. This gives the collector enough time to know you've responded, and it shows you won't give up so easily.

You have the most leverage right after filing your Answer, because it proves that you plan to fight back and that you know what you're doing (at least to an extent). Most collectors would rather settle with a portion of the debt than continue in court, which takes up a lot of time and resources.

SoloSuit can help you draft a Debt Lawsuit Settlement Letter in minutes!

Offer a lump sum payment

It is better to offer a lump sum payment as a settlement than a payment plan. Here are a few reasons why.

A lump sum payment is offering to settle the debt with a one-time payment, whereas on a payment plan, you may end up paying more than a lump sum over a longer period of time. Generally, most collectors would rather take a lump sum payment anyways. This is because most collectors have purchased your debt for pennies on the dollar, so accepting a lump sum agreement will still help them profit, and they won't have to worry about you defaulting on your payment plan.

Check out this video of SoloSuit's CEO explaining how to negotiate a debt settlement:

Here are SoloSuit's basic tips and tricks for negotiating a debt settlement:

How to Settle Credit Card Debt When a Lawsuit Has Been Filed (4)

Effects of settling a debt

Please keep in mind that if you have a debt settlement plan, it will be noted on your credit report as the debt was settled for less than you owe. This makes it harder to get credit in the future. Also, if you are given debt relief, you could have to pay more income taxes; the IRS considers any forgiven debt to be income.

No one is 'judgment proof'

If you were told not to be concerned with a debt collection lawsuit because you are “judgment proof”, think again. When a creditor succeeds in a debt collection lawsuit against you, they will obtain a legal judgment. If you are considered “judgment proof,” it simply means you do not make a sufficient amount of income for the creditor to garnish your wages. Nevertheless, the judgment will still be entered into the record and will appear on your credit report. Plus, if you eventually earn a higher income, the creditor can subsequently file a garnishment request.

Keep all of the above information in mind if you owe credit card debt and a collections lawsuit was filed against you. It is important to understand that you have multiple options and all is not lost. Creditors have an interest in working with you and you can often come to a reasonable agreement. The critical thing to remember is to not ignore the lawsuit.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

See Also
Credit Card Debt Forgiveness: What You Need to Know

Settle with SoloSettle

Make an Offer


>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance

Negotiate settlement if you're being sued by credit card company

If you're being sued by a credit card company, it isn't too late to settle the debt.

We wanted to learn more about how to negotiate debt settlement, so we asked a debt lawyer to share some tips and tricks on how to settle with creditors and debt collectors. Here are some tips on debt settlement from an attorney:

  • Show Hardship and Other Debts: Demonstrate financial struggles and other obligations, like other debts or inability to garnish Social Security, to encourage settlement.
  • Avoid Lowball Offers: Propose realistic settlement amounts; too low offers are likely to be rejected.
  • Know Who To Call: When negotiating debt settlement, you will typically contact the debt law firm, not the creditor or debt collector suing. The attorney acts as a middleman between the two parties.
  • Be Prepared for Counteroffers: Expect negotiation and be ready to adjust your offer accordingly.
  • Provide Accurate Financial Information: Be truthful about your financial situation, as creditors often have detailed information about you.

To learn more about how to negotiate debt settlement, check out our interview with attorney, John Skiba, below:

How to Answer a Summons for debt collection in all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

Guides on how to resolve debt with every debt collector

Are you being sued by a debt collector? We’re making guides on how to resolve debt with each one.

Resolve your debt with your creditor

Some creditors, banks, and lenders have an internal collections department. If they come after you for a debt, Solosuit can still help you respond and resolve the debt. Here’s a list of guides on how to resolve debt with different creditors.

Settle your medical debt

Having a health challenge is stressful, but dealing medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

Guides on arbitration

If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

Stop calls from debt collectors

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

Federal debt collection laws can protect you

Knowing your rights makes it easier to stand up for your rights. Below, we’ve compiled all our articles on federal debt collection laws that protect you from unfair practices.

Debt collection laws in all 50 states

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

Statute of limitations on debt state guides

Like all debt collection laws, the statute of limitations on debt varies by state. So, we wrote a guide on each state’s statutes. Check it out below.

Statute of Limitations on Debt Collection by State (Best Guide)

Check the status of your court case

Don’t have time to go to your local courthouse to check the status of your case? We’ve created a guide on how to check the status of your case in every state, complete with online search tools and court directories.

How to stop wage garnishment in your state

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in all 50 states.

Other wage garnishment resources

How to settle a debt in your state

Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created a guide on how to settle your debt in all 50 states. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

How to settle with every debt collector

Not sure how to negotiate a debt settlement with a debt collector? We are creating guides to help you know how to start the settlement conversation and increase your chances of coming to an agreement with every debt collector.

Other debt settlement resources

Personal loan and debt relief reviews

We give a factual review of the following debt consolidation, debt settlement, and loan organizations and companies to help you make an informed decision before you take on a debt.

How to repair and improve your credit score

Debt has a big impact on your credit. Below is a list of guides on how to repair and improve your credit, even while managing major debt.

How to resolve student loan debt

Struggling with student debt? SoloSuit’s got you covered. Below are resources on handling student loan debt.

Civil law legal definitions

You can represent yourself in court. Save yourself the time and cost of finding an attorney, and use the following resources to understand legal definitions better and how they may apply to your case.

Get answers to these FAQs on debt collection

How-to debt guides

Learn more with these additional debt resources

It only takes 15 minutes.
And 50% of our customers' cases have been dismissed in the past.

"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" – Heather

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How to Settle Credit Card Debt When a Lawsuit Has Been Filed (2024)

FAQs

How to Settle Credit Card Debt When a Lawsuit Has Been Filed? ›

You may lose the ability to dispute the debt, if you believe you don't owe it or that the amount is wrong, and depending on your situation and your state's laws, the creditor may be able to: Garnish your wages. Place a lien against your property. Move to freeze funds in your bank account.

Show Me More ›
How to settle credit card debt when a lawsuit has been filed? ›

How To Settle Credit Card Debt When a Lawsuit Has Been Filed
  1. Verify the Debt. The first thing you should do is considering hiring a debt relief law firm on a flat fee. ...
  2. Request a Settlement. ...
  3. Enter a Debt Settlement Plan. ...
  4. Take Action Before Your Court Date.

Read More ›
How to answer a court summons for credit card debt? ›

The best tips for drafting an Answer to your debt lawsuit
  1. The Answer isn't the place to tell your side of the story in depth.
  2. Deny, deny, deny.
  3. Include your affirmative defenses.
  4. Use standard formatting or “style”
  5. Include the Certificate of Service.
  6. Sign the Answer.
Dec 12, 2023

Get More Info ›
What happens if a credit card company sues you and you can't pay? ›

You may lose the ability to dispute the debt, if you believe you don't owe it or that the amount is wrong, and depending on your situation and your state's laws, the creditor may be able to: Garnish your wages. Place a lien against your property. Move to freeze funds in your bank account.

Get More Info ›
How do I respond to a credit card Judgement? ›

Credit Card Debt: Guide to Responding to Court Summons
  1. Review the Complaint and The Summon.
  2. Calculate the Deadline for Filing A Response.
  3. Draft A Response to The Complaint. Completing the Answer Form.
  4. File the Answer Form.
  5. Serve Copies to The Plaintiff.

Read The Full Story ›
How to negotiate out of court settlement? ›

The following guidelines can help you settle out of court and reach creative, mutually beneficial resolutions to your disputes, with or without lawyers at the table.
  1. Make sure the process is perceived to be fair. ...
  2. Identify interests and tradeoffs. ...
  3. Insist on decision analysis. ...
  4. Reduce discovery costs.
May 2, 2024

Explore More ›
How to negotiate a debt settlement lawsuit? ›

If I can afford to make payments, how do I get the best deal?
  1. Decide how much you can afford to pay, and offer less. ...
  2. If you can afford it, offer a lump sum. ...
  3. Stay calm and in control, no matter what the attorney says.
  4. If the attorney refuses to come down to an amount you can afford, consider walking away from the deal.

Read On ›
How to defend a debt collection lawsuit? ›

Defenses you can use in a debt lawsuit
  1. The plaintiff took too long to file the suit. ...
  2. The plaintiff engaged in wrongdoing or misrepresentation. ...
  3. You don't agree that you owe the plaintiff. ...
  4. The matter was decided in another legal case. ...
  5. The issue you're being sued for was not agreed to in writing. ...
  6. You paid or tried to pay.

Find Out More ›
How do you win a court case against a credit card company? ›

Common Defenses to Credit Card Debt Lawsuits
  1. Improper Service of the Summons and Complaint. ...
  2. Statute of Limitations. ...
  3. Fair Debt Collection Practices Act (FDCPA) ...
  4. Lack of Standing. ...
  5. Payment of the Credit Card Account, in Part or in Full. ...
  6. Fraudulent Credit Card Charges. ...
  7. Discharge in Bankruptcy. ...
  8. Mistaken Identity.

View More ›
How to get a Capital One lawsuit dismissed? ›

To get a Capital One lawsuit dismissed, theses steps might help: File a written Answer: This will help you avoid a default judgment and buy you time to work out a defense. Your Answer should be a straightforward response to the lawsuit's allegations. Solosuit can help you draft and file an effective Answer.

View Details ›

What happens if a credit card company sues you and you can't pay in the Philippines? ›

Collection Efforts: Credit card companies will typically employ various methods to collect the debt, such as calling or sending letters. Legal Action: The creditor may file a civil case for the collection of sum of money. If they win the case, the court may order the sale of your properties to settle the debt.

View Details ›
Can you be jailed for not paying credit card debt? ›

Can I go to jail if I don't pay my credit card debt? NO. You cannot go to jail simply for failing to pay your credit card debt. It is also illegal for creditors or debt collectors to threaten you with arrest or any kind of criminal penalty to try to get you to pay.

Learn More Now ›
How common are credit card lawsuits? ›

Lawsuits aren't very common, but they do happen regularly. According to a Consumer Financial Protection Bureau (CFPB) report, credit card companies sue for non-payment in about one of every seven cases or nearly 15% of the time. The average litigated account balances ranged from $2,700 to $12,300.

Explore More ›
How to write an answer to a credit card lawsuit? ›

Your answer should include the court name, case name, case number, and your affirmative defenses. Print three copies of your answer. File one with the clerk's office and mail (or “serve”) one to the plaintiff or plaintiff's attorney. The plaintiff is the debt collector, creditor, or law firm suing you.

View More ›
Can I negotiate with creditor after Judgement? ›

You may be able to negotiate a settlement with the debt collector to allow you to pay off the judgment under better terms. In Limited Civil cases (cases for $35,000 or less), if the other side will not agree to a payment plan, you can ask the judge to order a payment plan.

Discover More ›
How do I settle a credit card Judgement? ›

If you settle your case by paying part or all of the debt

Paying the full amount of the debt (plus any fees, costs, and interest required) Negotiating to pay a lesser amount and having the other side agree to accept that amount as full payment.

Keep Reading ›
Will creditors settle after judgement? ›

You may be able to negotiate a settlement with the debt collector to allow you to pay off the judgment under better terms. In Limited Civil cases (cases for $35,000 or less), if the other side will not agree to a payment plan, you can ask the judge to order a payment plan.

Continue Reading ›
What happens when a credit card company files a judgement against you? ›

Once the creditor or debt collector gets a judgment against you, they can garnish your wages, levy your bank account or put a lien on your property. However, if you can show that your wages are necessary to support you and your family, you can exempt your wages from collection.

Get More Info Here ›
What is the average settlement for credit card debt? ›

But that's not really the case. According to the American Fair Credit Council, the average settlement amount is 48% of the balance owed. So yes, if you owed a dollar, you'd get out of debt for fifty cents.

Get More Info Here ›
Is it bad to do a credit card settlement? ›

Debt settlement can eliminate outstanding obligations, but it can negatively impact your credit score. Stronger credit scores may be more significantly impacted by a debt settlement. The best type of debt to settle is a single large obligation that is one to three years past due.

See More ›
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