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Why You Should Fight Credit Card Lawsuits


In my experience, when consumers appear in court, they often make bad choices by "doing the right thing." Let me be very clear -- confessing to judgment in a credit card lawsuit is a terrible idea and is absolutely not "the right thing." I cannot count the number of times I have heard a judge ask, "Do you admit that you owe the money?" and the consumer responds, "Yes, I guess so."

That person just "did the right thing," right? Wrong. That person just saddled himself with a judgment for whatever amount of money was claimed in the complaint. That judgment earns interest at a rate of 9%. This means that, unless the consumer enters into a very aggressive repayment plan, the judgment will continue to grow and will never be satisfied.

The vast majority of lawsuit brought to collect credit card debts are brought by two types of entities: debt collectors and debt buyers. Collection lawsuits brought by credit card issuers are increasingly uncommon. This means that the party suing most consumers is at least one degree removed from the card issuer. For each degree of separation from the card issuer, the entity's ability to prove that it is owed a debt decreases.

It is very likely that the amount claimed to be owed is incorrect. It is also very likely that the debt buyer or collector does not have the necessary information to prove that any money is owed, let alone the amount claimed. The debt buyer's business model is to file a bare-bones complaint and hope that the consumer either fails to show up or that the consumer shows up and confesses to judgment.

Their business model depends on complacency, fear, and ignorance. Most people do not know that they can challenge the debt buyer. Many people just ignore lawsuits and hope that they will go away. Do not fall into this trap. Do not be fooled. In my next post, I will discuss the anatomy of a typical debt buyer lawsuit and how I just won a major victory for a client in just such a case.