A consumer who is going through financial troubles may struggle to keep up with payments on a credit card account. When this happens, the credit card company may bring a collections lawsuit against the consumer. This involves bringing a complaint in court and serving the complaint on the consumer. If the credit card company gets a judgment, it may be able to collect the amount owed from the consumer’s wages and other assets. The judgment may account for not only the basic debt owed by the consumer to the credit card company but also interest and court costs.
Getting a Credit Card Debt Judgment
Sometimes a debtor will not respond to a lawsuit at all. This may be a strategic decision to avoid accumulating court costs in a lawsuit to which they have no defense. Or it may result from a mistaken assumption that the lawsuit does not matter because they are judgment proof. (Read more here about why being judgment proof does not necessarily mean that you should ignore a collections lawsuit.) If the debtor received proper notice, the court will then enter a default judgment in favor of the credit card company.
In other situations, the case may proceed further. The debtor may respond to the complaint and argue that a defense applies. The credit card company then may bring a motion for summary judgment, arguing that it should receive judgment as a matter of law because the debtor’s defense is not valid, and there are no real disagreements about the relevant facts. If the court agrees, it can end the case by issuing a judgment at that stage. However, if the court feels that the debtor may have a valid defense, or if the facts are unclear, the case should proceed to trial. The credit card company will have the burden of proof at trial, and it will need to submit evidence to show that the debtor owes the amount claimed. If the court feels that it is more likely than not that the debtor owes the money, it will issue a judgment in the credit card company’s favor.
Settlements in Credit Card Debt Cases
A credit card company and a debtor may reach an agreement before the court formally resolves the case. The resulting settlement will become binding once the court approves it. Typically, it will take the form of the debtor agreeing to pay the credit card company a certain amount of money (less than what they actually owe) in exchange for the company dismissing the lawsuit. A judgment order, also known as a consent judgment, may be entered against the debtor for the lesser amount. This allows the credit card company to pursue the debtor for that amount by using all of the same collection methods that it could use if it won a judgment in court.
Enforcing a Credit Card Judgment
Getting a judgment opens a broader range of options to collect a debt than a credit card company would have without a formal judgment. The exact set of options will depend on state law. One of the most common methods is wage garnishment, but a credit card company also might be able to seize personal property that is not exempt under state law, or it might collect from your bank account. If you own a home or other real estate, the credit card company could file a lien against it.