If someone fails to answer a summons from a credit card company, the consequences can be significant and long-lasting. Below is an in-depth look at what happens in various scenarios when someone does not respond to the summons:
1. Default Judgment
If the person does not respond to the summons within the time frame specified (usually 20–30 days, depending on the state), the court will likely grant a default judgment in favor of the credit card company. This essentially means the court assumes the allegations in the lawsuit are true because the defendant did not contest them.
Implications of a Default Judgment:
• Monetary Damages: The court may order the person to pay the full amount of the debt claimed, plus interest, court costs, and attorney fees.
• Wage Garnishment: The creditor can request the court’s permission to garnish the debtor’s wages, typically up to 25% of disposable income (subject to state laws).
• Bank Account Levy: Creditors may obtain a court order to freeze and seize funds directly from the debtor’s bank account.
• Property Liens: A lien can be placed on the debtor’s property, such as a home, which may need to be satisfied before selling or refinancing the property.
• Credit Impact: A judgment will likely be reported to credit bureaus, significantly lowering the debtor’s credit score and making it harder to obtain credit in the future.
2. Increased Financial Burden
Even if the original debt was manageable, the costs associated with a default judgment can significantly increase the amount owed.
• Interest Accumulation: Credit card companies often charge high post-judgment interest rates, which can cause the debt to grow exponentially.
• Court and Legal Fees: The creditor’s legal fees and court costs are typically added to the total amount owed.
• Collection Fees: Some states allow creditors to add collection costs, further inflating the debt.
3. No Opportunity to Defend
By failing to answer the summons, the debtor forfeits the chance to present a defense or dispute the creditor’s claims. Some common defenses that could have been raised include:
• Statute of Limitations: The debt may be too old to be legally collected.
• Incorrect Amount: The amount claimed may be inaccurate or inflated.
• Improper Service: The summons may not have been served correctly, which could be grounds to dismiss the case.
• Identity Theft: The debt may not belong to the defendant at all.
Without responding, the debtor loses the ability to argue these points.
4. Long-Term Consequences
The effects of a judgment can extend far beyond the immediate financial impact.
• Renewable Judgments: In many states, judgments can be renewed, sometimes indefinitely, meaning creditors can pursue the debt for decades.
• Difficulty Renting or Buying Property: Judgments may appear on background checks, making it difficult to rent an apartment or qualify for a mortgage.
• Impact on Employment: Some employers check credit reports during hiring processes, and a judgment can be viewed negatively.
• Emotional and Mental Stress: Ongoing collection efforts and the fear of financial ruin can take a toll on the debtor’s mental health.
5. Contempt of Court (Rare but Possible)
In some cases, if the summons includes a subpoena for information or requires the defendant to appear in court (e.g., for a debtor’s examination) and they fail to comply, the court could hold them in contempt. This could result in fines or even arrest in extreme situations.
6. Potential Resolution Options After a Default Judgment
Even if a default judgment is entered, the debtor may still have some options:
• Motion to Vacate Judgment: If the debtor has a valid reason (e.g., improper service or excusable neglect), they may file a motion to have the judgment vacated. This typically requires acting promptly.
• Settlement: The debtor can negotiate with the creditor to settle the debt for a reduced amount, even after a judgment is entered.
• Bankruptcy: In extreme cases, filing for bankruptcy may discharge the judgment, depending on the type of debt and the debtor’s financial circumstances.
Preventing These Outcomes
The best way to avoid these scenarios is to respond to the summons within the allotted time. A formal response (called an “Answer”) gives the debtor the opportunity to dispute the claims or negotiate a settlement before the case proceeds to court.