Credit card companies have the right to file a lawsuit against you if you have not paid the balance you owe. They will not immediately sue you after your first missed payment but may consider it if you have not paid in several months and are uncooperative. Texas has a four-year statute of limitations on collecting unpaid debts, and credit card companies may feel pressured to take legal action before the deadline passes. There are several ways to respond to a lawsuit and protect yourself, including filing for bankruptcy.
How a Lawsuit Works
A credit card company files a lawsuit in hopes of getting a court judgment that forces you to pay what you owe. The process starts when you are served notice of the complaint against you and a summons for a court hearing on the lawsuit. You have to respond to the summons, and failing to respond could result in the court issuing a default judgment in favor of the credit card company. With a court judgment, the credit card company could use more forceful means of debt collection, such as bank levies and liens on your property and, if the judgment is from a state other than Texas, wage garnishment.
There are several ways that you can prevent a court judgment against you in a credit card lawsuit, including:
- Filing an answer to the lawsuit and negotiating a settlement for less than what you owe;
- Filing for bankruptcy;
- Contesting the validity of the lawsuit; or
- Repaying the debt in full.
The advantages of bankruptcy are that it will put an automatic stay on the lawsuit and probably allow you to discharge the credit card debt. Credit card debts are unsecured, which means you would not lose any property if you discharge them. Bankruptcy may be your best response to a credit card lawsuit in certain situations, such as if:
- You do not have the income or assets to offer a reasonable settlement;
- You want to avoid taking on more debt in order to repay your credit card debt; or
- You owe money to several creditors and wish to consolidate your debts.
Contact a Denton County Bankruptcy Attorney
You must quickly decide whether you will file for bankruptcy after receiving notice of a lawsuit against you. Bankruptcy can best protect you against creditors if you file before a court makes a judgment against you. A Frisco, Texas, bankruptcy lawyer at The Page Law Firm can discuss whether bankruptcy is right for you in your situation. To schedule a free consultation, call 214-618-2101.