The lawsuit starts with a summons, not a surprise judgment
When a credit card company sues you, the first thing that happens is you receive a summons and complaint — usually delivered by a process server or certified mail. The summons tells you the court, the case number, and the important date to respond (typically 20 to 30 days, depending on your state). The complaint lists what you owe, when you stopped paying, and what the company is asking the court to order you to pay.
You do not automatically lose the case when you receive these papers. The company has to prove its claim in court, and you have the right to respond. Many people ignore the summons because they feel the debt is justified or because they are afraid, but ignoring it is the single most costly mistake you can make — it leads to a default judgment, which means the court rules against you without hearing your side.
The summons will name the court where you must appear or file your response. Read it carefully and note the exact important date. If you miss that important date, the company can ask the court for a default judgment, and the judge will usually grant it.
Key Takeaways
- You will receive a summons and complaint by mail or in person, and you have 20 to 30 days to respond — missing this important date results in a default judgment against you.
- You can respond by filing an answer with the court, raising defenses like the debt being too old, the amount being wrong, or the company lacking proof you owe it.
- If the company wins, it can garnish your wages, freeze your bank account, or place a lien on your property, depending on your state's laws.
- Many credit card lawsuits settle before trial because the company wants to avoid the cost and uncertainty of court, and you may be able to negotiate a lower payoff.
- Some debts are protected from collection by law — for example, Social Security income and certain retirement accounts cannot be garnished in most states.
How to respond to the summons
Your response is called an answer, and you file it with the court before the important date. You do not need a lawyer to file an answer, though having one improves your chances. The answer must address each claim in the complaint — you can admit it, deny it, or say you do not have enough information to respond.
Common defenses in credit card lawsuits include: the debt is older than your state's statute of limitations (usually 3 to 6 years, depending on the state and the type of debt), the amount is wrong, the company cannot prove you signed the agreement, or the company lacks documentation showing you owe the debt. If the company bought the debt from another creditor, you can challenge whether it owns the debt or has the right to collect it.
You can also raise defenses about how the company treated you — for example, if it violated the Fair Debt Collection Practices Act by calling you repeatedly or threatening you. These defenses do not erase the debt, but they can reduce what you owe or get the case dismissed.
If you cannot afford a lawyer, contact your local legal aid office or search for free legal clinics in your area. Many offer free consultations or will help you file your answer for no cost.
What happens if you lose the case
If the court rules against you — either because you did not respond, because you lost at trial, or because you settled — the company receives a judgment. A judgment is a court order saying you owe the money. It does not automatically take money from your account or paycheck; the company has to take additional steps to collect.
The company can then use the judgment to garnish your wages, which means it asks your employer to send part of your paycheck to the court. The amount varies by state, but federal law caps wage garnishment at 25% of your disposable income (the amount left after taxes and mandatory deductions). Some states allow less.
The company can also freeze your bank account by placing a levy on it, which means the bank holds the money and sends it to the court. This can happen without warning, and you may not be able to access your account for several weeks while the court processes the levy.
In some states, the company can place a lien on your home or car, which means it has a legal claim on the property. If you sell the property, the lien holder gets paid from the proceeds. A lien does not force you to sell, but it stays on your property until you pay the judgment or it expires (usually 10 to 20 years, depending on the state).
Protections that limit what the company can collect
Not all of your income and assets can be taken to pay a judgment. Exempt income — money the law protects — cannot be garnished in most states. Social Security benefits, unemployment benefits, and certain retirement accounts (like IRAs and 401(k)s) are typically exempt, meaning the company cannot touch them even with a judgment.
Some states also protect a portion of your wages or a certain amount of money in your bank account. For example, some states say the company cannot garnish more than 25% of your disposable income, or cannot touch the first $1,000 in your bank account. These protections vary widely by state, so check your state's laws or ask a legal aid attorney what applies to you.
If the company tries to collect from a protected source — for example, by garnishing Social Security — you can file a motion with the court to stop it. You will need to prove the money is exempt, usually by showing bank statements or benefit letters.
Settling before or during the lawsuit
Many credit card lawsuits settle before trial because both sides want to avoid the cost and time of court. The company may offer to accept a lump sum that is less than the full amount owed, or to accept a payment plan. You can propose a settlement at any point — before you file your answer, during the case, or even after a judgment.
If you settle, get the agreement in writing and make sure it says what the company will do in exchange for your payment. For example, it should say the company will dismiss the lawsuit, stop collection efforts, and report the debt as settled to the credit bureaus. Do not pay anything until you have the written agreement signed by someone authorized to settle on behalf of the company.
If you cannot afford to settle or pay the judgment, ask the court about a payment plan (called a stipulation of judgment in some states). The company may agree to let you pay the judgment over time instead of all at once. This stops wage garnishment and bank levies while you are making payments, though it does not erase the debt.
How a judgment affects your credit and finances
A judgment appears on your credit report and significantly damages your credit score. It stays on your report for 7 years from the date it is entered, though the damage to your score lessens over time. A judgment also makes it harder to borrow money, rent an apartment, or get a job in some fields.
The judgment itself does not expire after 7 years — it can last 10 to 20 years depending on your state, and the company can renew it before it expires. However, after 7 years the judgment no longer appears on your credit report, which means it has less impact on your ability to borrow.
If you pay the judgment in full, ask the company to file a satisfaction of judgment with the court. This document tells the court the debt is paid and stops the company from collecting further. It does not remove the judgment from your credit report, but it shows future lenders that you resolved it.
What to do if you receive a summons
The moment you receive a summons, write down the important date to respond and put it somewhere you will see it every day. Do not throw it away or ignore it. If you are unsure whether the debt is real, whether you owe the amount claimed, or whether the company has the right to sue, contact a lawyer or legal aid office before the important date.
If you cannot afford a lawyer, search online for "[your state] legal aid" or call 211 to find free legal help in your area. Many legal aid offices will review your summons and help you decide whether to file an answer and what defenses you might have.
If you know you owe the debt and cannot dispute it, consider calling the company to discuss a settlement or payment plan before you file your answer. The company may be willing to settle for less than the full amount, which is cheaper than going to trial.
Frequently Asked Questions
Can the credit card company sue me if the debt is old?
It can sue, but you may have a defense. Each state has a statute of limitations — a time limit for suing — that ranges from 3 to 6 years for credit card debt. If the company sues after that period, you can raise the statute of limitations as a defense in your answer, and the court will likely dismiss the case. However, you must raise this defense; if you do not mention it, you may lose the right to use it.
What if I cannot afford to pay the judgment?
You can ask the court for a payment plan, and many judges will order one. You can also ask about a judgment debtor examination, where you tell the court about your income and assets so the judge can decide what you can reasonably pay. If you are judgment-proof — meaning you have no income or assets the company can legally take — the company cannot collect, though the judgment stays on your record.
Will the credit card company contact me before suing?
The company will usually send collection letters and call you before suing, but it is not required to do so. Some companies sue quickly, especially if the debt is large. If you receive a collection letter or call, do not ignore it — respond in writing if you dispute the debt, or contact the company to discuss payment options.
Can I stop wage garnishment after the judgment?
Yes, you can file a motion with the court to stop or reduce garnishment if your circumstances change — for example, if you lose your job or your income drops significantly. You can also stop garnishment by paying the judgment in full or by negotiating a settlement. Some states allow you to claim a portion of your wages as exempt, which reduces the amount the company can take.
Does paying a judgment remove it from my credit report?
Paying the judgment stops the company from collecting further, but it does not remove the judgment from your credit report when ready. The judgment stays on your report for 7 years from the date it was entered. After 7 years, it falls off automatically. Paying it does show future lenders that you resolved the debt, which is better than leaving it unpaid.