What Happens When You're Sued for Credit Card Debt?

Basics

Being sued for credit card debt is a very serious financial event. It is the last resort for a creditor to try to collect its money, and if the company wins the lawsuit, there are a number of long-term consequences for the debtor. While it is important to remember that one cannot be arrested for honestly accruing and not repaying a debt, it is still essential to not forget how serious a successful lawsuit can be to one's financial future.

Being Served

Being served with a summons indicates that your credit card company has begun a lawsuit against you. A sheriff's deputy will usually bring the summons to your home, though in some areas a process server or even a certified mail summons is sufficient. You have the choice to ignore the summons, which means you will lose the lawsuit, try to work the situation out with the creditor, or go to court and ask the judge for help.

Going to Court

Going to court can be a scary experience, but it is important to remember even if you don't have money to pay the debt it will not hurt you to visit the courthouse. A judge will ask you about your situation, and if he or she feels you honestly want to work the situation out might not set a legal judgment against you. However, it is important to remember if you don't work to repay the debt, you will likely eventually be successfully sued.

Potential Consequences

If you lose your case or choose not to go to court, a legal judgment will be entered against you. This is reported to the credit bureaus Equifax, Experian, and TransUnion and is considered a major negative item on your reports. The creditor can now seek to have part of your wages garnished to repay the lawsuit or even come after equity you might have in a house. Unpaid judgments can usually be renewed indefinitely even if you do not have assets, so doing all you can to avoid being successfully sued is usually the best course of action.