When you sign up for a credit card, you agree that it is your responsibility to pay for your balances each month. Consequently, you accept that the card issuer or the company has the right to sue you in case you don't follow the agreement. Credit cards are merely a way to pay for purchases; thus, they are not free money. Once you stop making payments, the card issuer may take legal steps to get back what they rightfully own.
If your creditor has taken legal action against you, doing the following steps may help:
Step 1: Evaluate
Some lawsuits are incorrectly filed. If you did not incur the charges made against you, you can file a dispute. This usually happens when you are a victim of identity theft. Most people are not even aware that their identity is being utilized by other persons. If this is what happened to you, you can contact the card issuer, the Federal Trade Commission, and the law enforcement to formally report the incident.
Step 2: Respond
If the charge against you is accurate, you may have to explain yourself to the creditor. One of the first things that card companies do is inform you that they have decided to sue you. When you receive the notification, you should acknowledge it by responding to the letter. The biggest mistake here is to think that the lawsuit will simply go away if you ignore it.
Step 3: Seek Help
You can hire a lawyer if you believe that you cannot face the situation alone. It is understandable that you may not have enough money to pay for the legal counsel. Fortunately, there are free attorneys that can aid you during such situations. Your lawyer can even provide assistance so you can make the right decisions regarding your current financial state.
Step 4: Educate Yourself
Even if you are sued by your creditor, you still have your rights against harassment and lawsuits. According to the Fair Debt Collection Practices Act or FDCPA, the creditor does not have the right to pursue you in the form of threats and even foul words.
Step 5: Appear
Don't ever miss a hearing. The judge may automatically side with the creditor if you don't show up when summoned.
Step 6: Negotiate
You can minimize the damage if you get to talk to your creditor. Believe it or not, card companies are actually more interested in the repayment than the lawsuit. You or your lawyer can negotiate with the creditor. You can offer a payment schedule and a monthly amount that you are comfortable with. If successful, you need to abide by the payment structure; otherwise, the company may resume the lawsuit if you miss repayments once again.
When a credit card company sues you for non-repayment, this does not mean that you will be arrested for it. However, a judgment may be performed against you, which will stay in your credit report for about seven years. This is where you can be arrested, specifically if you violate the judgment.