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Does Discover Sue for Credit Card Debt? The Unvarnished Truth

Yes, Discover does sue for credit card debt. While they might initially pursue other collection methods like phone calls and letters, if those prove unsuccessful, Discover, like most major credit card issuers, can and will file a lawsuit to recover the money owed. Understanding this reality and knowing what to do if you’re facing this situation is crucial for protecting your financial well-being.

Understanding Discover’s Collection Process

Before diving into the legal aspect, it’s essential to grasp the typical steps Discover takes to collect delinquent debt. This often unfolds in stages:

Initial Delinquency: Miss a payment, and the phone calls and letters begin. These early communications are often polite and focus on reminding you about the overdue balance and encouraging you to make a payment.
Increased Intensity: As the delinquency persists (typically after 90 days), the tone of the communications often becomes more assertive. Discover may also employ third-party collection agencies at this stage.
Charge-Off: After approximately 180 days of non-payment, Discover will likely “charge off” the debt. This doesn’t mean the debt disappears; it simply means Discover removes the debt from its active accounting books. The debt is still owed.
Legal Action: After the charge-off, Discover might decide to pursue legal action. This decision depends on several factors, including the amount owed, your location, and their assessment of your ability to pay. They might handle the lawsuit internally or sell the debt to a debt buyer who then files the lawsuit.

Why Discover Resorts to Lawsuits

Why does Discover bother suing? The answer is simple: to obtain a judgment. A judgment is a court order that legally obligates you to pay the debt. This gives Discover (or the debt buyer who owns the debt) significant leverage to collect, including:

Wage Garnishment: Discover can potentially garnish a portion of your wages to satisfy the judgment. This means a percentage of your paycheck is automatically deducted and sent to them.
Bank Levy: They can levy your bank accounts, meaning they can seize funds directly from your accounts to cover the debt.
Liens on Property: In some cases, Discover can place a lien on your property, such as your home. This means they have a legal claim on the property, and you may have to pay them before you can sell or refinance it.

What Happens if Discover Sues You?

Receiving a summons and complaint from Discover or a debt buyer acting on their behalf can be frightening. Don’t panic, but don’t ignore it either. Ignoring the lawsuit is the worst thing you can do. Here’s what typically happens:

Summons and Complaint: You’ll receive a formal summons and complaint, officially notifying you of the lawsuit. The complaint will detail the amount owed, the basis for the debt (your credit card agreement), and the relief they are seeking (a judgment against you).
Deadline to Respond: You have a limited time (typically 20-30 days, depending on your jurisdiction) to respond to the complaint.
Failing to Respond: If you fail to respond within the deadline, Discover will likely obtain a default judgment against you. This means they win the case automatically without having to prove anything. This is why responding is absolutely critical.
Responding to the Lawsuit: You can respond by filing an answer with the court. In your answer, you can admit, deny, or claim you lack sufficient knowledge to admit or deny each allegation in the complaint. You can also raise affirmative defenses.
Discovery: Both sides may engage in discovery, which involves exchanging information and evidence. This can include interrogatories (written questions), requests for documents, and depositions (oral examinations under oath).
Negotiation and Settlement: Many credit card lawsuits are settled out of court. You can attempt to negotiate a settlement with Discover or their attorneys. This could involve paying a lump sum for a reduced amount or agreeing to a payment plan.
Trial: If a settlement cannot be reached, the case may proceed to trial. At trial, both sides present evidence, and the judge (or jury, if applicable) will decide the outcome.

Key Strategies When Faced with a Lawsuit

If you’re sued by Discover, consider these strategies:

Consult with an Attorney: A qualified attorney specializing in debt defense can provide invaluable guidance. They can review the lawsuit, advise you on your legal options, and represent you in court.
Verify the Debt: Demand that Discover (or the debt buyer) prove they own the debt and that the amount claimed is accurate. Debt buyers often lack the necessary documentation to prove ownership or accuracy.
Raise Affirmative Defenses: Explore potential affirmative defenses, such as statute of limitations (the time limit for filing a lawsuit has expired), lack of standing (Discover or the debt buyer doesn’t own the debt), or breach of contract (Discover violated the terms of the credit card agreement).
Negotiate a Settlement: Settlement is often the best outcome. Try to negotiate a reduced lump-sum payment or a manageable payment plan.
Consider Bankruptcy: If your debt is overwhelming and you have no realistic way to repay it, bankruptcy may be an option.

Discover Credit Card Debt FAQs

Here are some frequently asked questions about Discover credit card debt and lawsuits:

1. What is the statute of limitations on Discover credit card debt?

The statute of limitations is the time limit within which a creditor can sue you to collect a debt. This varies by state and typically ranges from three to six years. It’s crucial to know the statute of limitations in your state because if it has expired, Discover cannot successfully sue you.

2. Can Discover garnish my wages for credit card debt?

Yes, Discover can garnish your wages if they obtain a judgment against you. The amount they can garnish varies by state, but it’s typically a percentage of your disposable income (the amount left after legally required deductions).

3. Can Discover put a lien on my house for credit card debt?

Discover can potentially place a lien on your house if they obtain a judgment and your state allows it. This is more common for larger debts.

4. What is a default judgment, and how can I avoid it?

A default judgment occurs when you fail to respond to a lawsuit within the specified timeframe. To avoid it, always respond to the summons and complaint by filing an answer with the court.

5. Should I try to settle with Discover before they sue me?

Yes, it’s often wise to attempt settlement before a lawsuit is filed. You may be able to negotiate a reduced balance and avoid the stress and expense of litigation.

6. What if I can’t afford to pay my Discover credit card debt?

Explore your options, which may include debt management plans, debt settlement, or bankruptcy. Seek advice from a qualified financial advisor or attorney.

7. Can Discover sell my credit card debt to a debt buyer?

Yes, Discover can sell your debt to a debt buyer. These companies specialize in purchasing delinquent debt and attempting to collect it.

8. What are my rights when dealing with Discover’s collection department?

You have rights under the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, deceptive, or unfair practices.

9. How does debt settlement work with Discover?

Debt settlement involves negotiating with Discover to pay a lump sum that is less than the full amount owed. This can be a viable option if you can’t afford to pay the entire debt.

10. Can I be arrested for not paying my Discover credit card debt?

No, you cannot be arrested for failing to pay your Discover credit card debt. Credit card debt is a civil matter, not a criminal one.

11. What is the best way to respond to a Discover lawsuit?

The best approach is to consult with an attorney and file a formal answer with the court, addressing each allegation in the complaint and raising any applicable affirmative defenses.

12. Can I dispute the Discover credit card debt?

Yes, you have the right to dispute the debt if you believe it is inaccurate or invalid. Send a written dispute to Discover, requesting verification of the debt.

In conclusion, Discover does sue for credit card debt. Understanding their collection process, your rights, and available strategies is vital to protecting your financial future. If you are facing a lawsuit, seek professional legal advice immediately.