Credit card companies exist to make money. They make money off of interest, money off of miscellaneous fees and money off of their premium services. When a borrower fails to repay a credit card balance, the company will explore a number of options, including filing a lawsuit to force repayment. Lawsuits cost a considerable amount of money, though, so companies pursue this option only under certain conditions. According to expert advice from Bankrate.com, credit card companies first determine whether their likelihood of winning a lawsuit and the amount they might potentially collect justifies the expenses associated with going to court. In addition, they evaluate certain credit factors about the borrower, including length of employment, homeownership and even age. If a debtor owes a large amount and appears to have a relatively stable residence and employment history, the credit card company might begin the legal process.
The Debtor Receives a Summons
When a credit card company files a lawsuit seeking repayment, the court must first notify the debtor of the pending legal action. In some jurisdictions, a deputy sheriff might take a summons directly to the debtor, while in other jurisdictions the court or credit card company can simply mail a registered letter to the debtor. In either case, the court must obtain proof that the debtor received the court summons, either through a written signature or a deputy's affidavit. When the debtor receives the summons, he must reply to the court within a designated amount of time, usually two to four weeks. If he does not reply, the court assigns victory to the credit card company and allows the lender to begin additional legal actions to secure repayment. When the debtor receives the summons, according to TFGI Debt Specialists, he can respond by agreeing to a repayment plan, representing himself in court or hiring a lawyer.
Both Parties Go to Court
If, after receiving a summons, a debtor responds and does not agree to a repayment plan, the court will set a date and time at which both the debtor and the credit card company must appear in court. When the debtor appears in court, he can refute the validity of the debt. If he succeeds in this claim, the court can declare some or all of the debt invalid and bar the credit card company from pursuing further action. If the credit card company wins the lawsuit, either through failure of the debtor to respond or by proving the validity of the debt, the court will allow the organization to take legal collection actions. Depending on the creditor and the amount due, these actions range from assignment of a court-ordered repayment plan to much more severe collections efforts. According to TFGI Debt Specialists, victorious creditors can garnish a debtor's wages and even, in some states, place a lien on the debtor's home.
