What Should You Do When You get a Lawsuit for a Credit Card Debt?

If you’re being sued for a credit card debt, you can count on endless attorneys sending you advertisement letters saying they’ve found you name on the Clerk’s website. All this can be overwhelming, but don’t panic. In many instances some people have not received any communication from credit card companies or any company for that fact trying to collect the outstanding debt.

To some, they are confused as to why they’re receiving the lawsuit if their credit report reflects the account has been charged off. First let me address exactly what does charge off mean and then I’ll get into more details about the options you have regarding the lawsuit.

When a credit card balance has been charged off, the creditor writes off the debt as a loss and closes the account. The debt is still owed and the creditor may take additional actions to try and recover the balance. Charge off does NOT mean the debt is FORGIVEN! To remove an account that has been charged off from your credit report, you can: (1) offer to pay the creditor in exchange for them removing the charged off account; (2) you can dispute the charged off account if you find there is incorrect information reported; or (3) you could hire a reputable credit repair company to help you remove it. If the creditor or collection company agrees to remove the charged off account from your credit report, ensure you have the agreement in writing.

Next, if you are sued by a creditor or debt collection company, upon receipt of the lawsuit you must take action. See how I just put that in Bold?- IMPORTANT. The lawsuit may require you to show up to court at a specific date and time or you will have 20 days to file an answer to the allegations in the lawsuit. As easy as the requirement sounds, about 70% of people who are sued for debts take no action. When no action is taken to defend against the debt, the debt collection company wins.

If you take my advice and choose not to ignore the lawsuit you have some options. First, you could reach out to an attorney who has experience defending consumers against debt collection companies and hire them. Hiring an attorney has its benefits since they can dispute the debt or negotiate a better payment plan. Alternatively, you could contact the attorney and/or law firm representing the debt collection company yourself and pay the debt.

Whatever you choose to do, just DO NOT ignore the lawsuit.