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It is easy to fall behind on credit card payments. A financial crisis can cause you to miss one or two payments. Then, it snowballs as the credit card company increases your interest rate, adds late payments, and takes other actions. The balance keeps increasing even though you try to make minimum payments.
If you stop paying your credit card bill, the company may file a credit card debt lawsuit. It could also sell the debt to a debt collector who could file a debt collection lawsuit. It is essential that you seek legal advice from a Massachusetts bankruptcy attorney as soon as possible. If the company obtains a judgment, you may face additional collection efforts.
What Happens When You Are Served With a Credit Card Lawsuit?
The credit card company or debt collector files a complaint with the court and serves you a copy of the summons and complaint. You have 20 days to respond to the complaint. You must file your answer with the court and serve a copy to the company or its attorney.
If you do not respond to the credit card debt lawsuit, the company can ask the court for a default judgment. With a default judgment, the credit card company can ask the court to issue a wage garnishment order. The company can take part of your paycheck to pay the judgment debt. The company may place liens on some of your personal property and bank accounts.
Your Rights and Responsibilities in a Credit Card Lawsuit in Massachusetts
Federal and state fair debt collection laws protect consumers by regulating how debt collectors and creditors can contact you to pursue debts. You have the right to sue a creditor or debt collector if they violate your rights or the law.
You have the right to defend yourself against a debt collection lawsuit. Potential defenses to a credit card lawsuit include:
- The statute of limitations has passed. The statute of limitations for most credit card lawsuits in Massachusetts is six years from the last payment.
- Challenge the company’s standing to file the lawsuit. They must prove they are owed the debt and have the right to sue.
- You paid the debt or do not owe the debt.
- The credit card company has included fraudulent charges.
- The amount of the debt is incurred.
- The company did not serve you with the summons and complaint correctly.
- You are not the person who owes the money (i.e., mistaken identity)
An experienced attorney can review the facts and evidence in your case to develop a defense strategy. In some cases, the best defense may be to file bankruptcy.
What Happens to a Credit Card Lawsuit if I File for Bankruptcy?
When you file Chapter 7 or Chapter 13, an automatic stay prohibits creditors from taking further actions to collect a debt. Therefore, credit card companies cannot file lawsuits after the person files bankruptcy. If a lawsuit is pending, it should be dismissed. If the creditor has a judgment and is garnishing your wages, the garnishments should stop immediately.
Most credit card debt is dischargeable in bankruptcy. If you file Chapter 7, the debt is discharged when you complete the case. In a Chapter 13 case, you pay a percentage of the debt through the Chapter 13 plan. When you complete the plan, the remaining debt is discharged. You are not required to pay discharged debts.
Call for a Free Consultation With Our Massachusetts Bankruptcy Attorney
Have you been served with a debt collection lawsuit? If so, call Logan A. Weinkauf, P.C., for a free consultation with a Massachusetts bankruptcy attorney. We will discuss your legal rights and options for dealing with debts you cannot pay.