Defending Credit Card Claims

CONSUMER DEBT DEFENSE · PRACTICAL GUIDE 

                 1. Do I need an attorney

It's tempting to say get a lawyer but cases vary.  Considerations include, 

·        Are there legitimate defenses. . 

·        Is there a substantial amount at stake. 

2. First moves after you are served


Read the summons and complaint immediately. Note the court name, case number, plaintiff (original bank or a debt
buyer), claimed balance, and the deadline to respond. Deadlines are commonly 20–30 days from service, but the
summons controls.
• Calendar the answer deadline. Treat it as non-negotiable even if you plan to settle.
• Keep the envelope and proof of how papers were delivered (personal service, substitute service, mail). Improper
service can be a defense.
• Usually it makes sense to call the plaintiff creditor's lawyer and discuss a resolution.  However, still file an answer unless you have confirmed an extension in writing.  
• Gather statements, the cardmember agreement, payment history, bankruptcy papers, identity-theft reports,
and any prior settlement letters.
• Find the card agreement at the CFPB credit card agreement database if you no longer have a copy.
Doing nothing is the most common path to a default judgment, wage garnishment (where allowed), bank levy, and a
recorded judgment that can last years.

3. Demand for arbitration

Most credit card agreements contain a binding arbitration clause. Either party can usually elect arbitration instead of
court. For a consumer sued by a bank or debt buyer, that clause can be a strategic tool. Why consumers use it
•  Sometimes creditors seek summary judgment, a procedure to obtain a judgment before trial.  However, that can be limited 
in arbitration. 
•  Arbitration can involve compromise and possible consideration of a variety of factors such as hardship.  In contrast, there are strict rules of evidence in court.
•  There are added costs for the creditor which may prompt them to seek a reasonable resolution. 
“  If you are considering this, make sure to request arbitration before the answer deadline.  Typically the American Arbitration Association is the designated forum and they have rules that explain how to request arbitration.     

4. Filing an Answer

If you cannot settle, then make sure to file an answer in court.  Filing it on time prevents a default judgment and preserves defenses. You can still negotiate after you answer. In fact, an Answer often improves settlement leverage because the plaintiff now has to prove its case.
How to respond to each allegation
• Admit only what is clearly true (for example, your name and address if accurate).
• Deny what is false or unproven (ownership of the account, the exact balance, interest and fees).
• If you lack knowledge, say so. That operates as a denial and forces the plaintiff to prove the point.


5. Negotiation with the Direct Creditor 

First understand whether you are dealing with the original creditor, American Express, Citibank, Discover, etc, or a debt buyer.  Here is a guide if you're dealing with the original creditor.   

• Hardship Many creditors will consider hardship to reduce the amount of the claim or negotiate manageable payments.  Remember though, still file your answer unless an extension have been agreed to in writing.  
• Check for investigations or lawsuits  Periodically a company may have been found to have provided improper billing or done something else unlawful.  It can be important though to connect your situation with an overall investigation.   
• If you lack knowledge, say so. That operates as a denial and forces the plaintiff to prove the point.


6. Negotiation with a Debt Buyer


• Hardship ----------------

Many creditors will consider hardship to reduce the amount of the claim or negotiate manageable payments.  Remember though, still file your answer unless an extension have been agreed to in writing.  
• Check for investigations or lawsuits  Periodically a company may have been found to have provided improper billing or done something else unlawful.  It can be important though to connect your situation with an overall investigation.   
• If you lack knowledge, say so. That operates as a denial and forces the plaintiff to prove the point.

A. Addressing Deceptive Demand Letters from a Debt buyer 


• Letters on Old Debts  Debt buyers can do a shady thing.  They write you a letter suggesting they may sue, when they know they can't because the debt is barred by the statute of limitations.  Indeed deceptive letters may create a right for the consumer to file a claim under the Fair Debt Collection Practices Act (FDCPA).      
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