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What to Do If You’re Being Sued by a Credit Card Company

by Erin B. Shank

It is very easy to get behind on your credit card bills. You may have recently lost a job, become sick, or suffered another setback. Meanwhile, your credit card debt and other unsecured debt keep mounting. Before you know it, you can’t afford the minimum payments, let alone the extra interest and penalties that have been tacked on by the creditor. Next, you may be served by a constable with a lawsuit filed by a credit card company. While this situation can be frightening, try not to panic. Instead, take the time to learn about the process and your options for responding to it.

What to Expect When Your Credit Card Company Sues You

The first thing you should know is that the filing of a lawsuit is a civil process. In America, you can not be thrown in jail for not paying a debt.

The official legal process will begin when the credit card company or debt collector files a lawsuit against you. It will have you served by a sheriff or constable to prove to the Court that the creditor has given you a copy of the lawsuit and you are aware of that legal proceeding.  You can attempt to defend yourself in the lawsuit, but the simple fact is usually you have no defense because you actually owe the money that is the subject of the lawsuit.

Options for Responding How to the Lawsuit

Virtually every client that calls the office these days have been served with a lawsuit.  Some clients have been served with multiple lawsuits, filed against one or both of the spouses.  Most of these clients report that they have multiple delinquent credit cards, repossessions, debts owed to former landlords, and other types of debts and are therefore subject to even more lawsuits.

Since there is no defense to most of these suits, Erin suggests that clients with these fact situations file a bankruptcy case in order to stop all of these collection lawsuits and let them get discharged from all of these collection lawsuits.  A bankruptcy filing can stop a pending lawsuit or get you discharged from debt after a judgment has been entered.

Judgment Liens

If a creditor has obtained a judgment against you, that creditor may have also filed a judgment lien, in Texas, this is called an Abstract of Judgement, which causes a cloud on the title of your home.  For each of our client homeowners, Erin B. Shank personally checks the deed records of the county where the client’s home is located and if she finds that a creditor has filed an Abstract of Judgement, she files a motion with the Bankruptcy Court seeking to avoid that lien and clearing the title to her clients’ home.  The Bankruptcy Judge routinely grants those motions and Ms. Shank then files a copy of the Bankruptcy Court’s order in the Deed Records of the county where her clients’ home is located.  This removes the cloud of the title of the clients’ home.  She provides this service with no additional attorney’s fees charged to the client to remove these liens. Most other law firms do not provide this service to their clients who own a home.

Requesting a Settlement

If you contact the lawyer who has sued you and request a settlement, that lawyer will then ask you to submit a financial statement listing all of your assets, including the location and bank account numbers of all of your bank accounts.  If you comply with this request, you have given that lawyer complete access to garnish your bank accounts.

Garnishment of wages is illegal in Texas.  However, garnishment of bank accounts is legal in Texas and by contacting a lawyer that is suing you and giving him/her your bank account information, you have invited a bank account garnishment.  Many out-of-state creditors can attempt to circumvent Texas anti-garnishment laws by stating that they are out-of-state creditors and, if you are employed by an employer whose payroll office is outside of the State of Texas, your wages may be garnished.

Additionally, if you do reach a settlement with a creditor that has sued you, that creditor will send the IRS 1099 for any debt that it has forgiven as a part of the settlement.  That means that you owe taxes on the portion of the debt that was forgiven.

For these reasons, Erin suggests that clients not attempt to settle or contact these ruthless creditors and their ruthless lawyers.  A client who is not an attorney should never contact an attorney and discuss their personal information with that attorney.  Instead, I suggest that these clients consider filing a bankruptcy case to discharge this and virtually all of their remaining debts.  If a garnishment of your wages or bank account has commenced, the filing of the bankruptcy case will stop those wage and bank account garnishments immediately.

Declaring Bankruptcy

I strongly believe that considering bankruptcy is the best option in these circumstances.  A Waco bankruptcy attorney can discuss the pros and cons of filing bankruptcy to stop these collection lawsuits.

How to Rebuild your credit after a suit has been filed against you

When a creditor files a collection lawsuit against you, it has probably also placed negative reports on your credit report.  Erin has found that even if you settle with a creditor, they will not correct those negative reports.  However, when a bankruptcy case is filed, you are discharged from those debts, even if a judgment has already been entered against you, and the law office of Erin B. Shank, P.C. sends a letter to each of the credit reporting agencies asking that the derogatory comments placed by the creditor be reported as discharged.  You are then able to start rebuilding your credit and beginning your financial fresh start.

How Erin Shank Can Help

If a credit card company is suing you, the best thing you can do is to learn about your legal rights and options. A knowledgeable Waco Bankruptcy Attorney can review your circumstances and determine the best path forward.

Contact Erin B. Shank, Attorney at Law, today. She offers a free virtual consultation to discuss your situation and explain your options.

erin b shank

I have been practicing exclusively bankruptcy law in Texas for almost 40 years. Unlike most other law firms, my firm is exclusively dedicated to helping individuals and small businesses find a way out of their financial difficulties through the use of our nation’s bankruptcy laws.

Associations & Awards
  • Client Companion Award | Erin B. Shank
  • Avvo Review Badge
  • Preeminent Award | Erin B. Shank
  • avvo
  • state bar of texas
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  • Avvo Top Attorney Badge
  • GreaterWacoChamber
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