If your credit card company sues you, you’ll need to decide if it’s worth paying an attorney to help you. In most cases, it is. Studies have shown that debtors with legal representation in a debt collection suit are much more likely to get a better outcome, such as winning their case outright or reaching a mutually agreed settlement with the plaintiff, than those who don’t.
A lawyer can raise any defenses you have in court, negotiate with the creditor to settle the debt, and inform you of your rights and responsibilities. Below are some situations where you should consider hiring or consulting with an attorney if your credit card company files a lawsuit against you.
You Have a Defense to the Lawsuit
If you believe you have a defense to the lawsuit, you’ll probably need an attorney to help you raise that defense in court.
The Statute of Limitations Has Expired
Under state law, a creditor or debt collector gets limited time to sue you for an unpaid debt. This deadline is called the “statute of limitations.” The time limit varies from state to state, but it’s generally from three to six years.
If the statute of limitations has passed, you have to assert this defense by responding to the lawsuit and providing supporting evidence to get the case dismissed. An attorney can help you do this.
You Aren’t the Person Who Owes the Debt
Credit card companies often sell unpaid debts to a debt collector, and that party eventually files lawsuits against the debtors. Debt collectors sometimes sue the wrong person.
If you have a name that’s the same or similar to someone who actually owes the debt, you can raise the defense of mistaken identity. You’ll need to demand proof from the debt collector that you’re the person who owes the debt.
An attorney can help you make the debt collector produce the original documents so that you can show that your signature, Social Security number, and other personal information doesn’t match that of the actual debtor.
The Party Suing You Can’t Prove It Owns the Debt
If the party that files the lawsuit isn’t the original creditor, it must prove it owns the debt. So, the lawsuit paperwork must include appropriate documentation showing that the plaintiff bought your debt from the original creditor or another entity that previously purchased the debt. Otherwise, you might be able to assert lack of standing—meaning the party suing you doesn’t have the right to collect the debt—as a defense.
An attorney can help determine if this defense is available in your situation. An attorney can also point out, and raise in court, defenses that you haven’t considered.
You Don’t Understand the Consequences of the Lawsuit
Even if you don’t have a defense to the lawsuit, you might want to consult an attorney to help you understand what you’re facing and explain what could happen if you lose the suit. If you don’t respond to the suit, the court will most likely enter a judgment against you for the amount the creditor claims you didn’t pay. Courts routinely also order debtors to pay accrued interest plus court fees, which can exceed the original amount owed.
Other harmful consequences might include wage garnishment, directing your bank to turn over funds from your account, and the seizure of personal property. An attorney can explain the specifics of what might happen in your situation.
You Need Help Negotiating a Settlement
You might want to try to negotiate a debt settlement, like by offering to pay less than you owe in one lump sum. But dealing with a creditor or debt collector can be frustrating and time-consuming. An attorney can negotiate with the creditor or debt collector on your behalf to reduce the amount you owe and settle the suit. (Be aware that the IRS might count a debt you settled for less than you owe as taxable income.)
You Aren’t Sure What You Should—or Should Not—Say To a Creditor or Debt Collector
You could inadvertently hurt your situation if you’re unsure of what to say to a creditor or debt collector. For example, if the statute of limitations has passed, you could restart it by saying or signing something acknowledging that the debt is valid or agreeing that you owe the money. You could also revive the statute of limitations if you make a payment on the old debt.
An attorney can advise you about what you should and should not say (or do) regarding an old debt. And, if you decide to hire an attorney to represent you in the matter, the lawyer can deal with all communication to and from the creditor or debt collector.
What To Do If You Can’t Afford An Attorney
If you can’t afford an attorney, you might be able to get low-cost or free help from a legal aid program or clinic that provides legal assistance to low-income individuals and families. You can find a list of various legal aid programs on the Legal Service Corporation’s website.
If you don’t qualify for legal services help and can’t afford to hire an attorney to represent you throughout the suit, it might be worth paying a lawyer for an hour of legal advice. The attorney might be able to confirm that you don’t have any good defenses, provide tips on negotiating with the credit card company, and tell you about other options you could have.