How a credit card lawsuit works
A credit card company sues you in civil court when you stop paying your balance and the debt is old enough that they believe they have a legal claim. The company files a complaint in your local court — usually small claims court if the amount is under $5,000 to $10,000 (the limit varies by state), or district court for larger amounts. You then receive a summons telling you when and where to appear.
The lawsuit is not a criminal case. The company is not trying to send you to jail. They are trying to get a court judgment that lets them collect the debt through wage garnishment, bank account levies, or liens on property you own. If you ignore the summons and do not show up, the court will likely enter a default judgment against you, which means you lose automatically.
Key Takeaways
- A credit card company must serve you with a summons and complaint, and you have a specific number of days (usually 20 to 30) to respond in writing to the court.
- If you do not respond or appear, the court enters a default judgment, which gives the company the legal right to garnish wages or levy bank accounts.
- You can defend yourself by checking whether the debt is still within the statute of limitations, whether the company can prove the debt is yours, or whether the amount is correct.
- Many credit card lawsuits settle before trial if you contact the company or appear in court to negotiate, because trials are expensive for both sides.
- Once a judgment is entered, the company can collect for years through garnishment or liens, so responding to the lawsuit is always better than ignoring it.
The statute of limitations and why it matters
Every state has a statute of limitations — a time limit after which a creditor can no longer sue you for an old debt. This period typically ranges from three to six years, depending on your state and the type of debt. The clock usually starts from the date you last made a payment or last acknowledged the debt in writing.
If the debt is outside the statute of limitations, you can raise this as a defense in court. The company cannot force you to pay a time-barred debt through a lawsuit. However, you must raise this defense in your written response to the court — if you do not mention it, you may lose the right to use it. Some states require you to state it explicitly in your answer to the complaint.
Check your state's statute of limitations before you respond. Your state bar association website or a local legal aid office can tell you the exact period for credit card debt in your state. If the debt is old, this defense alone can win your case.
What to do when you receive a summons
Read the summons carefully. It tells you the court name, the case number, the important date to respond, and where to send your response. Do not ignore it or throw it away. Missing the important date means the court can enter a default judgment without hearing your side.
The important date to respond is usually 20 to 30 days from the date you were served, though this varies by state and court. Your response is called an answer in district court or a response in small claims court. You must file it with the court and send a copy to the company's lawyer.
If you cannot afford a lawyer, contact your local legal aid society or bar association. Many offer free or low-cost help with debt defense. Some law libraries also have self-help resources and forms you can use to file your own answer. Filing yourself is allowed, though it requires you to follow court rules carefully.
Common defenses to a credit card lawsuit
The most straightforward defense is that the debt is outside the statute of limitations. If you can show the company waited too long to sue, you win. Keep any records of your last payment or last written communication with the company, because the date matters.
You can also challenge whether the company actually owns the debt. Credit card debt is often sold to collection agencies or other companies. The company suing you must prove they have the legal right to collect. If they bought the debt from another company, they should have documentation of that sale. If they cannot produce it, their case is weaker.
Another defense is that the amount is wrong. Request all documents the company has about your account — statements, payment history, fees charged. Look for math errors, duplicate charges, or fees that were not authorized. Even if you owe something, you may not owe the exact amount they claim.
You can also argue that you never received proper notice of the lawsuit. If the summons was not served correctly — for example, left with someone who does not live at your address when your state requires personal service — the court may dismiss the case.
What happens at trial or settlement
Most credit card cases settle before trial. If you show up in court and the company's lawyer realizes you will defend yourself, they often offer to negotiate. Settlement might mean paying a portion of the debt, setting up a payment plan, or having the case dismissed.
If the case goes to trial, the company must present evidence that you owe the debt. This usually means account statements, payment records, and the contract you signed when you opened the card. You can cross-examine their witnesses and present your own evidence. Small claims trials are usually informal and do not require a lawyer, though you can bring one.
If you win, the case is dismissed and the company cannot collect through this lawsuit. If you lose, the court enters a judgment against you. If you settle, the terms depend on what you and the company agree to — get any settlement in writing before you pay anything.
What a judgment means for your finances
A judgment is a court order saying you owe the money. It does not send you to jail, but it gives the company legal tools to collect. They can garnish your wages (take a portion of your paycheck), levy your bank account, or place a lien on property you own.
Wage garnishment typically takes 10 to 25 percent of your disposable income, though the exact amount varies by state and by how much you earn. Your employer is required to comply with the garnishment order. Bank levies can freeze and empty your account. Liens on property prevent you from selling or refinancing without paying the judgment first.
A judgment stays on your record for years — typically 7 to 20 years depending on your state — even if you pay it off. It can affect your ability to borrow money or rent an apartment. This is why responding to the lawsuit and trying to settle or win is always better than ignoring it and letting a default judgment happen.
How to negotiate with the credit card company
If you receive a summons, you can contact the company's lawyer or the company itself to discuss settlement before you file your answer. Many companies would rather settle for less than the full amount than spend money on a trial. Offer to pay a lump sum or set up a payment plan.
Get any settlement offer in writing before you pay. The written agreement should say exactly what you will pay, when you will pay it, and what happens if you do — usually the company dismisses the lawsuit. Do not rely on a verbal promise.
If you settle, make sure the company agrees to dismiss the case with prejudice, which means they cannot sue you again for the same debt. If they dismiss without prejudice, they could theoretically refile later.
Frequently Asked Questions
Can a credit card company garnish my wages without a judgment?
No. A company must first win a lawsuit and get a judgment from a court. Only then can they ask the court to issue a garnishment order to your employer. This is why responding to the summons matters — if you do not respond, the company gets a default judgment and can move straight to garnishment.
What if I cannot afford to pay the judgment?
You can ask the court about payment plans or hardship. Some states allow you to request a hearing to explain your financial situation. The company may also agree to a settlement for less than the full amount. Ignoring the judgment does not make it go away — it only makes collection easier for the company.
Does paying off an old debt restart the statute of limitations?
In most states, making a payment or acknowledging the debt in writing can restart the clock, giving the company a new period to sue. Before you pay an old debt, check with a legal aid office about whether it will restart the statute of limitations in your state.
Can I represent myself in a credit card lawsuit?
Yes. You have the right to represent yourself in civil court. Small claims court is designed for people without lawyers. District court is more formal, but you can still file your own answer and appear at trial. Many legal aid offices offer free help with forms and strategy.
What should I bring to court if I represent myself?
Bring any documents related to the account — your own payment records, statements, correspondence with the company, proof of the last payment, and any evidence that the amount is wrong. Bring copies for the judge and the company's lawyer. Organize them in order by date so they are straightforward to follow.