Does anyone have advice for how to respond to a court summons for credit card debt?

Question

There are several ways to consolidate credit card debt with bad credit, including taking out a personal loan or doing a balance transfer as an authorized user on someone else’s credit card. You could also tap into your home equity. However, succeeding with any of these options is not easy; it’s very possible none of them will work out for you.... read full answer

Debt consolidation is difficult with bad credit because it’s hard to qualify for lower interest rates than you already have. It’s also hard to get a loan amount that’s high enough to consolidate.

Ways to consolidate credit card debt with bad credit:

Balance transfer. You won’t qualify for any good balance transfer credit cards, and the 0% APRs that come with them, with bad credit. But if you can get a friend with good credit to open a balance transfer card and add you as an authorized user, you can transfer the balance to the card. The primary cardholder will be responsible for paying, but you can pay them back.

Unsecured personal loan. Few unsecured personal loans cater to people with bad credit. And the ones that do will have very high interest rates, likely higher than the rates you already have on your credit card. But federal credit unions cap their interest rates at 18% and may accept people with bad credit. In addition, some lenders allow you to apply for a personal loan with a co-signer who has better credit, which would let you qualify for better interest rates.

Secured personal loan. Some lenders offer personal loans to people with bad credit who put up collateral. The lender can take the collateral if you default, which reduces their risk. It’s possible you may be able to find a secured personal loan with a lower rate than your existing credit card debts. But you risk losing your property as well – don’t put up things like a car if you can avoid it.

Home equity loan. It’s not impossible to get a home equity loan with bad credit, but it will be difficult since they tend to require credit scores of 700+. But if your home is especially valuable, it may be worth a try. However, home equity loans are secured by your house, so if you default you might face a foreclosure.

Retirement account. If you have a retirement account, you may be able to take money out of it to pay off your debts. But you’ll have to pay a penalty if you’re below the minimum age to start drawing from it. You can also take a loan from your retirement account without penalty but must pay it back within five years. You probably don’t want to take either of these options for debt consolidation.

You could also ask a family member or friend if they’ll loan you money to pay off your credit card debts. You may be able to pay a lot less interest in this case, but you should make sure that you write up a contract and stick to it.

If no debt consolidation options work for you, there are other ways to handle your debt. For example, you might want to consider settling with your creditor for a lump sum or working out a management plan where you have lower payments or reduced APRs.

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Answer 1 · 2020-01-24 20:48:21

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WalletHub, Financial Company

@WalletHub • 01/24/20 This answer was first published on 04/26/18 and it was last updated on 01/24/20.For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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You should respond to a court summons for credit card debt by first trying to settle the issue with your creditor and then by fighting the lawsuit in court if you’re unable to come to an agreement. The worst thing you can do is ignore the summons. It’s not going to go away, and pretending it doesn’t exist will just result in the court ruling against you, ordering you to repay the full amount your creditor says you owe.

If you don’t know why you received a court summons for credit card debt, contact the debt collector that filed suit and ask for documentation proving you owe the amount in question. This will give you more information to go on, and if the debt collector doesn’t have the necessary paperwork, the suit could go away.

In general, receiving a summons for credit card debt means you’re at least 180 days behind on payment. Creditors can sue earlier than that, but they rarely will. At the 180-day mark, your credit score will have already taken a hit, and there could be more to come. Court judgments are included on credit reports, after all. So the right response is key. And since the whole situation can be a lot to handle, we’ll summarize the next steps you should take below.

Here’s how to respond to a court summons for credit card debt:

Don’t ignore it. If you do this, the court will simply rule in the issuer or debt collector’s favor. And they may be able to garnish your paycheck or bank account to get the money they’re due.
Try to work things out. Call up your issuer or debt collector (if your debt has been sold to a collections agency). Explain that you can’t afford the full amount due but are willing to pay some of it. You might be able to strike a deal, like paying less overall but all at once, and avoid court.
Answer the summons. If you can’t come to an agreement, you’ll need to answer the summons. You’ll need to do this within 20-30 days of receiving it, depending on the court. It will have a number of claims about your debt on it, to which you must agree, disagree or partially agree/express that you’re not sure. This is like pleading “guilty” or “not guilty,” except the charges aren’t criminal. When you disagree, you need to write out an explanation. For example, “the statute of limitations has passed” or “I have already paid this amount.” It would be a good idea to talk to an attorney before writing your response.
Consult an attorney. It’s always a good idea to have the advice of a professional on your side. You may be able to get a free consultation from a lawyer.
Go to court. When the issuer or collections agency brings the claim against you, ask for proof. If they don’t have all the proper documentation, the court may reject their claim. You should also ask if the statute of limitations has expired; if it has, you won’t owe any money.
Respond to the ruling. The court may dismiss the suit, grant the issuer part of the amount, or grant the full amount. If the court rules in favor of the issuer, there are a few things you can do. You can try once more to settle the debt, just pay the amount you owe, or contest the ruling. You could also declare bankruptcy, but that’s a last-ditch option.

In all, you need to make sure you respond to a summons in a timely manner, and it’s a good idea to try to settle so you won’t pay as much. And with any future debts, having frequent communication with the issuer and trying to work out repayment plans may help avoid more lawsuits.

Answer 2 · 2018-05-18 13:38:06

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Sara Stiles, Member

@sara_stiles • 05/18/18 This answer was first published on 05/18/18. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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If you're served with a lawsuit from a credit card company or collection agency, you must act quickly to answer the lawsuit or you may lose by default. First of all, you need to find out how much time you have to file your answer. It’s also a good idea to check the statute of limitations. You can try researching defences on your own, but I think the best thing is to consider hiring an attorney.

Answer 3 · 2018-05-17 21:55:42

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Stacy Faraday, Member

@stacy_faraday3 • 05/17/18 This answer was first published on 05/17/18. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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You've got about a month to respond to it. Before you do though, get an attorney to explain everything on that document, as each summons is different.

Does anyone have advice for how to respond to a court summons for credit card debt?

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