Editorial Policy

Expert Q&A: Sued for Old Credit Card Debt

Erica Sandberg

July 5, 2011

QDear Erica,
I received a certified letter from a law firm saying they are suing me for old credit card debt. I read that this is a real bottom-feeding law firm and that they are ruthless. I’ve also been reading about how you should respond by disputing the debt and asking them to validate it (usually they are unable to, so they are required to cease collection efforts). I’m wondering what happens if they actually can prove that they bought the specific debt. The way I see it, I can pay the whole thing, pay a settled amount or get the debt dismissed because they can’t prove it’s valid. I’d prefer the last option. How do I deal with a collections firm like this? Can I do it myself, or should I get an attorney? — Franklin

ADear Franklin,
So do you or do you not owe the money? That’s the first and most important question you need to answer. You see:

  • If the debt is valid, you don’t dispute it.
  • If the debt is invalid, you do dispute it.

Ask Erica

The way you’ve presented your letter, it sure seems as though you really did run up that balance. Assuming this is true, the next most pressing issue is the state you live in. Yes, you have correspondence from a law firm, but if the statute of limitations for credit card debt collection has lapsed, there’s not much they can do but send collection letters and make calls until you instruct them to stop. Statute time frames vary hugely across the country. For example, in Alaska, it’s three years, and in Iowa, you’d be looking at ten.

Mind that if the debt is valid and it’s still within the statute of limitations, you can be taken to court. It doesn’t matter if the law firm is one of the more aggressive ones or not. If they can sue you, it’s a very real possibility that they will.

Therefore, I strongly suggest that you do not avoid this matter any longer. Trust me, Franklin, you do not want a lawsuit to take place. If it does, you’ll end up owing a lot more money than you do now because court costs and legal fees will be added to the balance. And once you lose (which you probably will), the judgment creditor can have an awfully long time to collect. Just how long depends on the state you live in. It could be decades. Oh, and you can also be at risk of your wages being garnished, as well as other highly unpleasant post-judgment collection techniques.

Does this mean that you can’t go for a settlement at this stage? Not at all. You may, and you certainly do not need an attorney to represent you in the process. Make an offer. They will either accept it, reject it, negotiate with you — or just decide they’d rather take you to court. If they make it sound that the latter is going to happen, I strongly recommend you pay the entire bill at once. No more futzing around.

Now, in the event the debt is invalid or you can no longer be sued for the balance, log on to one of the credit reporting bureau websites (they’ll alert the others) and dispute it using their online form. After a month, it should not appear anymore. Also, send the law firm a cease and desist letter. Once they receive it, they will stop contacting you. This is your right under federal law, by the way — the Fair Debt Collection Practices Act.

And speaking of your rights, while it’s important to know them, it’s just as critical to understand and accept your responsibilities. If you charged purchases and got the stuff or services, then you repay the bank that loaned you the money. Trying to sneak out of it will only make a mess of your credit and your morals.