What to do if I was just served today on an old credit card?

I was served today on an old old credit card for about $8,000. I was out of work and didn’t have the means to pay living expenses and all my bills. My wife and I have just started to get back on track with our bills and credit and don’t want to file bankruptcy. What do I need to do so as to not lose the judgement for not answering? Will the creditor still be willing to negotiate a settlement out of court for less even after filing? I might be able to get a small $3-4K loan on my car to pay a lesser amount. I’d rather pay a small loan payment than a larger monthly judgement amount.

Asked on August 27, 2011 California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

First issue: how old is the default (that is, how long ago did you stop paying)? It appears that in California, the statute of limitations, or time to sue, on a defaulted credit card debt is 4 years, so if you stopped paying longer ago than that, it may be that you can't be sued.

Assuming that the case is not too old and you can be sued--

Second: if you don't answer you will lose by default. No matter what, file an Answer in the case. Deny any allegations you can in good faith deny; answer other ones that you don't have the knowledge to answer. By answering, you avoid an automatic loss and give yourself time to try to settle.

Third, you can and should try to settle. Any settlement is voluntary on the creditor's part, so try to come up with the best offer you can make. Initially offer something less than that--they'll never believe your first offer is your best--but be prepared, if you want to settle to go to the best one you could possibly honor.


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