Can You Be Sued For Credit Card Debts?

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Can You Be Sued For Credit Card Debts:
Factors Affecting The Chances of Being Sued

The short answer to this question of can you be sued for credit card debts is 'yes', but that does not mean that the credit card company definitely will decide to sue you. They basically just want to get as much of the money you owe them back as they can, and will take whatever action they think is going to get the best results. The action they decide to take depends on many factors, such as:

How big your debt is and how far behind you are with payments. No company is likely to sue for credit card debt that is not a significant amount or which is not very late. The costs involved in legal advice and action can be significant, so they will not do this lightly.

If you have an address that you have been at for some years, have a steady job, and are young enough to expect to work for many more years, you will look less likely to do a moonlight flit, so the card company is more likely to consider working some way out to get you to pay off the debt.

If there is another user for your card, the card company is likely to start pursuing this person before deciding to sue you.

Can You Be Sued For Credit Card Debts:
Yes You Can - But Don't Panic Yet

Whatever kind of debt problems you have, you should first look at the Debt Management Guide, which tells you how to get out of debt without spending or borrowing more money.

Credit card debt is classed as a form of 'Secondary' of non-priority debt (see Section 2 of the Debt Management Guide for further information). This means that there is no imminent prospect of losing your home or having bailiffs take possession of your property. They can certainly take legal action against you through the courts, which should result in you making an arrangement to pay back the debt at a rate that you can afford.

If the credit card company send you a 'Default Notice', this means they can take legal action against you, so the first thing you should do is take legal advice. If this does happen, you may be able to apply to the court for a 'Time Order', which can stop the interest accruing on your outstanding debt and reduce the payment amount that you need to make.

You can apply for a Time Order yourself by writing to the card company with an offer of payment. It would be sensible to back up your offer with a Personal Financial Statement to demonstrate that your offer is all you can afford. If they refuse this offer, then you have to apply to the County Court for the Time Order and they will then make a decision on whether the offer you made was reasonable or not.

You can avoid paying the court fee for a Time Order by just making your offer to the card company and then making the payments you have offered even if they do not accept it. This way it is up to them to take you to court if they don't agree with your offer. This is when you then apply for a Time Order, but it will be the Card Company who pays the court fee.

Can You Be Sued For Credit Card Debts:
The County Court Claims Procedure

In the absence of a Time Order, the card company can make a claim through the County Court. This will be for what is known as a 'Money Only' claim. If such a claim is upheld, then a County Court Judgement will be registered against you. County Court Judgements are recorded on your credit file and so can have an impact on future applications for credit.

The County Court Judgement should result in a repayment plan that you have to keep to. The repayment amounts ought to be based on what you can actually afford, and the order should also mean that interest will stop accruing on your debt.

A claim against you will start with the credit card company contacting the court, after which you will be sent a claim form to complete. You must take legal advice at this point.

Can You Be Sued For Credit Card Debts:
Consequences of Court Action

Once a County Court Judgement is made against you, there are potentially more serious consequences if you do not keep up with the agreed payments. After the court has decided what you have to pay, the creditor can then legally use bailiffs to take possession of your property if you still do not pay. The court will decide whether or not to do this and will issue what is called a 'Warrant of Execution' for this to go ahead.

The court can also take action to deduct money directly from your wages. This is called an 'Attachment of Earnings'. Failure to co-operate with this can result in being arrested, or imprisoned for up to 14 days.

The most serious consequence though, is if the credit card company asks the court to secure the debt against your home. This is called a 'Charging Order' and effectively turns your debt into a 'secured debt', meaning that if you default on your payments your home may be sold to pay off the debt.

Can You Be Sued For Credit Card Debts:
Conclusions And Final Thoughts

So we know that you can indeed be sued for credit card debts, but that is not necessarily as bad as it can sometimes sound. It should not result in you being told you have to pay back all you owe immediately, or being sent to prison. The result of being sued for credit card debt ought to be a payment plan that you can stick to.

The serious consequences start if you do not then stick to the payment schedule that the court has set up. If you find that you can't make the payments because your circumstances change, you should apply to the court to 'vary the judgement', which should result in smaller payments over a longer period.

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