When a credit card company sues a consumer to collect on a delinquent account, the consumer has four basic options:Â (1) Settle the debt for a percentage of the original amount owed; (2) Declare bankruptcy and have the debt discharged; (3) Ignore the suit, which usually results in a default (i.e. automatic) judgment for the credit card company; or (4) Defend the suit.
Many consumers are reluctant to fight credit card collection lawsuits, because they believe that they have no viable defenses. This is often a mistake. Debt collection lawsuits are a high-volume business. Creditor’s attorneys’ practices are set up to file lawsuits in large batches, and generate large amounts of default judgments. As a result, creditor’s attorneys often spend very little time preparing each case, and are surprised when consumers actually fight back. There are numerous defenses that a skilled consumer rights attorney can employ to defeat collections activity by credit card companies, including:
- There is No Proof of the Debt – Credit card cases are based on contract law. In order to win, the credit card company must prove that the consumer entered into a valid contract and owes the amount claimed. Because of the huge number of customer accounts credit card companies must maintain, they often make record keeping mistakes, and are unable to produce sufficient documentation to prove that the consumer entered into a contract or actually owes anything. Additionally, some credit card companies have had problems with so-called “robo-signing,” the signing of affidavits or other documentation by someone who hasn’t verified that the statements contained in them are true. A few routine document requests to the credit card company are often all that is necessary to reveal a lack of evidence to prove the case.
- Service of Process – Each state has rules governing proper legal notification of lawsuits, known as service of process. Since credit card attorneys file massive numbers of lawsuits, it is common for them to make mistakes regarding service of process. For example, process could be served at the wrong address, meaning that the consumer is unaware that they have been sued until after a judgment has been entered and the credit card company begins garnishing their wages or bank accounts. If the consumer’s attorney can find a mistake in service of process, it may be possible to have a default judgment set aside, meaning that the credit card company must either start its lawsuit over from the beginning, or collect nothing.
These are only two of the many defenses that a skilled attorney may use on behalf of the consumer. If the debt in question is a few hundred or a few thousand dollars, hiring an attorney may not be economical. But if the amount is more than ten thousand dollars, hiring an attorney and fighting the suit is an option consumers may want to consider.
