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Right now, Americans are grappling with unprecedented levels of credit card debt. The average cardholder owes about $8,000 on their credit cards and the total amount of credit card debt nationwide surged past $1.17 trillion in late 2024, marking the highest level ever recorded and representing a troubling acceleration of an ongoing trend. This surge has been driven by a mix of factors, including the lingering impact of inflation on everyday expenses and a high-rate environment that has pushed average credit card APRs above 23%.
As a result, about 9% of cardholders are delinquent on their credit card payments. That leaves a large number of cardholders at risk of legal action from creditors, as credit card companies and third-party debt buyers have the option to turn to the courts to recover unpaid balances. Being sued over delinquent credit card debt can result in major repercussions for cardholders, as these lawsuits often demand full repayment, including accrued interest and fees, and can result in judgments that enable wage garnishment or asset seizure.
While the prospect of defending yourself in court can seem daunting, if you’re being sued for your delinquent card debt, it’s important to address the issue as quickly as possible. Luckily, understanding your rights and the legal process can make a significant difference in the outcome — and there are several valid ways to challenge or dismiss a credit card debt lawsuit.
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8 ways a credit card debt lawsuit can be dismissed
There are numerous ways to challenge or dismiss a credit card debt lawsuit, whether through formal legal defenses or pre-trial resolution strategies. These include:
Formal legal defenses
The formal legal defenses you may have if you’re being sued over delinquent credit card debt involve:
Statute of limitations defense
One of the most straightforward grounds for dismissal is when the debt collector files suit after the statute of limitations has expired. Each state sets its own time limit for credit card debt lawsuits, and if you can prove the debt is time-barred, the court must dismiss the case. That’s part of why you should be cautious about making any payments on old debts, as doing so can restart the clock on the statute of limitations.
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Lack of standing to sue
Many credit card debts are sold to third-party debt buyers who may not properly acquire all necessary documentation to prove ownership of the debt. If the debt collector cannot produce a complete chain of title showing how they acquired the right to collect your debt, they lack standing to sue. This defense has become increasingly relevant as it becomes more common for debt buyers to purchase large portfolios of defaulted accounts, often with incomplete documentation.
Insufficient evidence of the debt
Credit card companies and debt collectors must prove the existence and amount of the debt with proper documentation. This typically includes the original credit card agreement, monthly statements showing purchases and payments, and proof that you agreed to the terms. If they cannot produce these records or if the documentation contains errors or inconsistencies, you may have grounds for dismissal.
Procedural violations
Debt collectors must follow strict procedures under the Fair Debt Collection Practices Act (FDCPA) and state laws. As a result, there are common violations that could lead to dismissal of the lawsuit, including failing to properly serve the lawsuit, filing in the wrong jurisdiction or failing to include required information in the complaint. If the debt collector has engaged in harassment or other prohibited practices, you may also have a counterclaim under the FDCPA.
Identity theft or fraud
If the credit card debt resulted from identity theft or unauthorized charges, this presents a complete defense to the lawsuit. Many states have specific procedures for asserting identity theft defenses in debt collection cases, but in general, you’ll need to provide evidence such as police reports, identity theft affidavits or proof that you disputed the charges with the credit card company.
Pre-trial resolution strategies
Before a case reaches the courtroom, these strategies could lead to a lawsuit dismissal:
Debt settlement
Negotiating a lump-sum settlement for less than the full balance can resolve the case before trial. Many creditors will accept 30% to 60% of the balance to recoup some of what’s owed and avoid litigation costs. Just be sure to get any settlement agreement in writing and ensure it includes a clause requiring the lawsuit to be dismissed before agreeing to it.
Debt validation
Requesting debt validation under the FDCPA forces the debt collector to prove they own the debt and that the amount is accurate. If the debt collector cannot provide proper validation within 30 days, they generally must cease collection efforts, including dismissing any pending lawsuit.
Bankruptcy filing
While not technically a dismissal, filing for bankruptcy immediately stops the lawsuit through the automatic stay provision. The debt may ultimately be discharged in bankruptcy, though, effectively ending the creditor’s ability to collect.
The bottom line
The key to successfully defending against a credit card debt lawsuit is acting promptly and methodically documenting your defense. Seek qualified legal counsel whenever possible, as procedural mistakes can waive valid defenses. Many jurisdictions offer free legal clinics or pro bono services for debt collection defendants, and remember that even if outright dismissal isn’t possible, raising strong defenses or negotiating with the creditor or debt collector could motivate them to offer favorable settlement terms.