Top Defenses to a Credit Card Lawsuit


Credit card debt is a significant problem in America. In late 2020, Americans collectively owed an astounding $807 billion in credit card debt with the average household carrying over six-thousand dollars in revolving debt based on 2019 calculations. Unfortunately, many outstanding debts turn into lawsuits, which subsequently turn into default judgments. If you are sued by a creditor and do not properly respond, the court has the discretion to award a default judgment against you giving the creditor power to collect the outstanding debt by garnishing your wages, placing a levy on your bank account, and even attach a lien to your home or property.

The worst thing you can do if you are sued by your creditor is to ignore the lawsuit. An experienced consumer litigation attorney can help you understand the requirements in your state to ensure you handle the complaint properly, from responding in a timely manner to adequately defending the allegations against you. Each case will look different and you should always consult an attorney to guide you, but to give you an idea of the defenses that might be available, here are the seven top defenses to a credit card lawsuit.  

1. Violation of the Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act, or FDCPA, is a federal law established to protect consumers. The law imposes certain requirements on creditors seeking to recover unpaid funds from consumers. For example, when a creditor attempts to collect a debt, the consumer has the right to demand proof of the debt. Upon the consumer’s request for validation of the debt, the creditor must cease collection efforts until the debt has been validated by the creditor. 

Not only can a consumer assert the FDCPA as a defense to a credit card lawsuit, but the consumer may also file a countersuit against a creditor for collection efforts that violate the FDCPA. A creditor who violates the FDCPA by threats, harassment, or improper collection efforts may be responsible for compensating the consumer for actual damages, statutory damages, attorneys’ fees, and costs.

2. Improper service

To initiate a lawsuit, a summons and complaint must be properly served upon the affected parties. There are rules regarding how, when, and where you can be served. While the specific requirements of service vary by state, the U.S. Constitution gives every American the right to due process, which includes having proper notice of a credit card lawsuit being filed against you and having the opportunity to respond to the claim. Without proper service, the consumer is deprived of the knowledge, information, and time necessary to effectively respond to the lawsuit. This may be determined a violation of the consumer’s rights and as such, could be an assertable defense to the claim. 

If a creditor files a lawsuit against you for outstanding credit card debt, check the laws in your state to make sure the service requirements were satisfied or consult an experienced consumer litigation attorney for guidance in asserting improper service as a defense to the lawsuit.

3. Lack of standing

Debt buyers are plentiful in America. These third-party debt collectors purchase delinquent accounts from creditors for a small fraction of the balance and then attempt to collect the full balance plus accruing interest from the consumer. Creditors are happy to get paid even if the purchase amount is much less than what the consumer owes on the account, and the debt buyer stands to make a significant profit on the accounts it is successful collecting on.

The problem with debt buyers is they often purchase large quantities of delinquent accounts at once, and sometimes these accounts have been sold multiple times. This means that debt buyers often lack the specific documentation needed to establish ownership over the account and since a creditor can only sue you if it has a relationship with you, you may be able to assert the debt buyer lacks the standing to sue you on the account if adequate documentation is not provided upon your request. Consumer litigation can be tricky, especially when there is a debt buyer involved. If you are sued for a debt by a party other than the original creditor who owns the credit card you used, you may not be responsible for the interest charged by the debt buyer and the debt buyer may not even have the right to sue you. Contact an attorney for assistance in navigating lawsuits initiated by debt buyers before you file a response.

4. The Statute of Limitations

As with most claims, the law limits how much time is allowed to file a lawsuit. Credit card litigation is no exception. State law places time limits on when a creditor can pursue legal action against outstanding credit card debt. Typically, the clock starts on the date of last payment and tolls anywhere from three to six years later depending on the particular state’s law.

5. Mistaken identity or fraudulent use

You cannot be sued for a debt that is not your responsibility. As such, look out for situations in which your card was stolen, compromised, or improperly processed. However, you must avoid waiting until legal action is initiated for unpaid debt to address the fraudulent charges. As soon as you become aware of any fraudulent activity with your credit card, you should contact authorities immediately and file a police report. This will equip you with crucial evidence to prove that the outstanding debt is not yours to pay.

6. Bankruptcy discharge

Filing bankruptcy will invoke a mechanism called the “automatic stay,” which protects the consumer from any collection actions, including lawsuits. Bankruptcy is not appropriate for every situation, and likely is not the best option for consumers with minimal debt. However, because credit card debt is dischargeable in bankruptcy, creditors will have to move any collection efforts to the bankruptcy court upon a consumer’s filing. If your debt was previously discharged in bankruptcy and you are later sued by a creditor for an account that was properly listed in your bankruptcy payment schedule, you can assert bankruptcy as a defense to the claim. 

As always, consult an experienced attorney with questions about your specific case.