The Common Law

My Credit Card Company is Suing Me: What Can Really Happen?

You're not sure how it happened, but that credit card bill spiraled out of control, and the credit card company finally made good on its threat to take legal action. Your account was first turned over to a collection agency, and now an attorney has filed a lawsuit against you. What can happen if you just ignore the lawsuit?

If you take no action once a lawsuit is filed, the company can seek a default judgment – which essentially means that the court rules against you without a trial. While certain exempt property can be out of reach, such as a primary residence and other property deemed exempt by statute, the company may become entitled to take legal steps to seize and sell your nonexempt property to satisfy the judgment.

These steps may include obtaining a lien on your nonexempt real property in any county where you own real property and/or obtaining a writ of execution, which will direct the sheriff or constable to take possession of your nonexempt personal property and sell it to pay off the judgment.

As is generally the case, sticking your head in the sand and hoping the problem will go away is probably not the best solution. You may be able negotiate a settlement with the company under which you agree to pay a lesser amount than your total debt or enter into a payment plan that you can stick to.

Negotiating with the company's attorney early on may prevent unnecessary costs and legal expenses from being added to your burden. It may also help you avoid, or at least minimize, the negative impact of the unpaid debt on your credit and your ability to borrow money in the future. A valuable first step may be contacting someone experienced in these matters, such as an attorney or consumer credit counselor.

If you cannot work out a settlement, bankruptcy is a drastic, but sometimes necessary, option. Should you find yourself in this position, you should consult a qualified bankruptcy attorney.

Please submit column suggestions, questions, and comments to thecommonlaw@austinchronicle.com. Submission of potential topics does not create an attorney-client relationship, and any information submitted is subject to being included in future columns.

Marrs, Ellis & Hodge LLP, www.jmehlaw.com.

The material in this column is for informational purposes only. It does not constitute, nor is it a substitute for, legal advice. For advice on your specific facts and circumstances, consult a licensed attorney. You may wish to contact the Lawyer Referral Service of Central Texas, a non-profit public service of the Austin Bar Association, at 512-472-8303 or www.austinlrs.com.

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