4 Defenses to a Credit Card Debt Lawsuit
The total credit card balance in the U.S. is currently $925 billion. This is a $38 billion increase since the second quarter of 2022, marking the largest increase in over 20 years, according to consumer debt data from the Federal Reserve Bank of New York.
If you have been issued with a summons from a credit card company or debt collection agency the experience can be a frightening and overwhelming one. It can be helpful to speak with an experienced credit card defense lawyer who can not only advise you of your rights and explain the legal process to you, but can also make you aware of any possible defenses that may apply to your case. This article will discuss some of the most common defenses to credit card lawsuits.
1. Improper Summons and ComplaintA credit card company must adhere to certain requirements when serving a summons and complaint and each state will have its own requirements regarding the correct protocol.
If the creditor does not serve you correctly with regard to notice of your lawsuit, you may have grounds to challenge them on the basis that they did not follow the proper procedure. An experienced attorney can help you determine if this is the case, and state this as a defense in your initial response to the lawsuit.
2. Statute of LimitationsUnder the law, credit card companies have a certain time period in which they can file a suit against you. This is known as the statute of limitations, and will vary from state to state. In most states, the statute of limitations for credit card debt is between three to six years starting from the date of the last payment. This means credit card companies and collection agencies cannot sue you for nonpayment of credit card debt once the time prescribed by the statute of limitation has passed in your state.
3. Lack of StandingIt is common practice for credit card companies to sell their bad debts to other companies. In order to sue you these third parties must have the right to do so by being able to prove they bought your debt and your particular account from your creditor. If the party suing you cannot provide the necessary documentation which proves they purchased your debt you may be able to argue lack of standing as a defense.
4. Fair Debt Collection Practices Act (FDCPA)The FDCPA is a federal law that places limits on the actions of debt collectors when it comes to collecting past debts. It was enacted to eliminate abusive, deceptive, and unfair debt collection practices and prohibits a debt collector from using ‘any false, deceptive, or misleading representation or means in connection with the collection of any debt.’
In addition to prohibiting any threatening collection methods, this legislation requires that any person or entity acting as a debt collector must first provide you with proof of your debt upon request and cease any action until they do so. You can challenge a credit card debt lawsuit against you by asserting an FDCPA violation and counter-suing the creditor in question. If successful, you may be entitled to statutory damages up to $1,000, as well as recovery of your legal fees.
You may be able to respond to a lawsuit for unpaid credit card debt with one or more of these defenses.
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