How to Settle Credit Card Debt Before Court

If you're behind on a credit card payment, your balance may have already gone to a collection agency. If you still can't work it out, chances are good that a complaint and summons will be arriving eventually, and you will be facing a court hearing and a judgment. A lawsuit is not a decision against you, but it does mean you can take steps to settle the debt before answering the complaint before a judge.

If you don't answer, you won't have a leg to stand on even if you do show up for the court hearing. If you don't show up in court, you lose by default. If you do answer, and request full documentation of the debt, you impose costs on the creditor that he'd prefer to avoid. When you owe a debt, the creditor has the legal right to sue and enforce a judgment for the full amount of the debt as well as fees and costs. However, the expense of going to court, and the uncertain nature of enforcing judgments, will discourage the creditor from pursuing it further if you do make a reasonable offer to settle. For this reason, you should be able to settle for less than the full amount.

File an answer to the complaint that you've received. There is a strict deadline on these answers, which varies among the states. Usually, you will have 20 or 30 days after service of the complaint and summons to submit an answer. If you don't answer the complaint, you are, in effect, admitting to the truth of all the allegations in the complaint. The answer must reply, point by point, to each of the numbered paragraphs in the complaint. Admit only those facts that are indisputable, such as your legal name and address. Deny those facts that might be in dispute, such as the amount of the debt and the date of the last payment.

Contact the plaintiff's attorney with an offer to settle the debt for a monthly or one-time payment you can afford. The name and contact information appear at the end of the complaint. Make your offer in writing. Send it by certified mail and make a copy of the original. This legally proves that you have made a reasonable offer to settle the debt, and establishes the date you delivered this offer to the plaintiff's representative.

If your offer is accepted, contact the plaintiff's attorney to arrange for payment. The plaintiff may accept payment to the attorney or require payment to the collection agency or creditor. If the company rejects your offer, you can make a counteroffer. If you're not prepared to make a counteroffer, you must appear in court to plead your case. Bring copies of all documents and prepare to show the court that you've made a reasonable offer to settle.