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Credit Card Lawsuits

The time frame to bring a cause of action for breach of contract is four years from the date of the last transaction. The last transaction would be the last charge or the last payment. This is Texas breach of contract law and this is the cause of action that a credit card company will bring against you to get judgment. Typically, a credit card provider sells the debt to a debt collector who files the cases without much research in the hope of obtaining a default judgment. American Express is one credit card provider that typically sues on their own accounts.

What is a Summons and Complaint?

In the packet of papers you received from the process server, you will find:

  • A paper telling that you have till the 1st Monday following 20 days to file answer
  • Some kind of certification that you were served from a process server
  • Any evidence the Plaintiff (i.e. collection agency) is submitting. There could be documents such as affidavits from the collection agency. There might also be documents from the original creditor,
  • A list of allegations, which constitute the lawsuit. Many debt collectors will also put discovery into the lawsuit, such as request for admissions.

Complaint or Lawsuit

Most lawsuits will look like the following:

Complaint Number #XXXXXXX
Collection Attorney Plaintiff vs. YOU Defendant
Allegation 1: <Gives plaintiff’s name, address>
Allegation 2: <Gives your name and address>
Allegation 3: Typically, this next allegation will say something like “Defendant obtained a credit card from Credit card Company X”
Allegation 4: Typically, this next allegation will say something like “Defendant used the credit card to obtain goods and services”
Allegation 5: Typically, this next allegation will say something like “Defendant racked up charges totally $XX and then refused to pay”
Discovery is then also added which is a tool lawyers use for fact finding.
In order to prevent a default from going forward you must answer the lawsuit. You must do it quickly, you only have 10-30 days (depending on your court) to answer the complaint. If you do NOTHING, you automatically lose and a judgment will be taken against you.

Affirmative Defenses

This type of defense is the legal reasons why the complaint should be thrown out. Some of the best affirmative defenses are:

  • Debt is Time-barred: The statute of limitations has passed.
  • Plaintiffs lack legal standing. The plaintiffshave failed to provide legal evidence that they are legally entitled to collect the debt. This happens when debt collectors cannot prove that they purchased or were assigned the debt.

You can list these affirmative defenses at the bottom of your answer, after the specific responses to the allegations. In Texas your affirmative defense are required to be verified, you must sign the answer in front of a notary.

File Your Answer

You will need to send a copy of your answer to the courts and the lawyer listed in the lawsuit. Make sure your answer is filed stamped by the clerk in the court.

Assert Counter Claims

You may have a counterclaim against the debt collector which you would need to bring in the lawsuit

Set Case for Final Trial

Final trial is held within 8 months but could be sooner than you expected. You are allowed 45 day notice of the 1st trial setting. At the trial, the credit card company will attempt to prove up the case with business records affidavits. They almost always do this. So as long as they file the records with the court and give you the 15 day notice, they could do this. Thus, you will have no one to cross examine about the accounting and only records to review. Best to have an attorney if you have gone this far and the case has not been dismissed or settled.

Consider Bankruptcy

If judgment is taken, it will follow you for at least 10 years, if you file bankruptcy, the lawsuit is stayed, along with any other debt collection efforts. The bankruptcy will be on your credit report for about 7 to 8 years but your balances will be zero on the debt that was discharged in the bankruptcy.

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