Why do credit card companies sue clients?

Credit card companies sue clients when the clients fail to pay off their bills. The bills could be valid, based on money you really owe, or they could be invalid based on bills the company says you owe but you know do not.

Use our credit card finder to compare and select low interest credit cards that may be able to help you pay off your debt before it gets to the lawsuit stage.

The lawsuit may come from the credit card company itself or the company can pass off your debt to a collection agency that files the lawsuit against you. If you have outstanding credit card bills and have not been paying them, a being sued by your credit card company is a real possibility.

What should I do if I’m sued?

Responding the lawsuit is the option suggested by the Law Offices of Craig Fagan. You may respond to the lawsuit personally or hire a lawyer to respond for you, which should be done by the date specified in the lawsuit paperwork.

If you do respond and end up fighting the lawsuit in court, you may face additional fees for hiring an attorney, court filing, and discovery fees. It is possible to win such a lawsuit, notes the Bankruptcy Law Network, although it is also possible you will be simply putting off an inevitable loss.

Paying off the money the credit card company or collection agency says you owe is another option. Making the payment, however, may prove difficult.

Easy-to-pay installments are not usually an option for paying off the debt when it gets to the lawsuit stage. The credit card companies may instead require you pay the full amount, sometimes inclusive of the additional charges accrued by a high interest rate for non-payment.

The credit card company may work with you to lower the interest rate charges, but usually only if you can still pay off the full amount with the lower fees. Paying off the debt with a low interest credit card may be an option, but you will still owe the money to the low interest credit card and possibly face another lawsuit if you do not.

Ignoring the credit card lawsuit is another option, although this one may come with disastrous results. If you ignore the lawsuit and fail to respond or show up in court, you are likely to lose by default.

If I lose the lawsuit, will I go to jail? What can happen?

Not paying your credit card account is not grounds for sending you to jail, according to credit attornies. You however, may face other difficulties if the lawsuit comes to fruition and you lose by default or by owing the debt.

Each state has its own laws when it comes the garnishing your wages for credit card non-payment. Depending on the state where you live, you may or may not be subjected to having money taken out of your paycheck if you are found to owe the money.

Even if your wages may be safe from the debt, your bank account, and personal property – including your home – may be at risk. If you do lose a credit card debt lawsuit and the plaintiff knows what bank you use, where you live and what you own, the plaintiff may attempt to:

Garnish your bank account
Levy your personal property
Place a lien on your home

Losing a credit card debt lawsuit is also likely to show up negatively on your credit report.

Can I be sued by a collection agency for a debt my credit card company said was written off?

When a credit card company “writes off” a debt, that typically means they want to clear their own records for tax purposes, not that the company is forgiving your debt, according to the Law Offices of Craig P. Fagan.

You still owe the money, and the company can sell your credit card debt paperwork to a debt collector, a company that exists solely to collect on debts. Although the debt collection agency may know the amount of money the credit card company says you owe, it may not have the paperwork that proves you owe the debt.

The agency would have to produce a copy of your original signed contact with the credit card company, as well as proof that you did not pay the money. Not all debt collection agencies have such paperwork and, as a result, collection agencies can lose the lawsuit for not having sufficient evidence.

Use our credit card finder to check out low interest credit cards or instant approval credit cards that may be able to help manage your money.