Can You Settle Credit Card Debt After Being Served? Complete Guide 2025

It's natural to feel rattled when you receive a court summons. For most people, it's not something that happens every day. 

If you've been served with a summons for credit card debt, you could still avoid a trial by settling. The key is to act quickly and stay calm to make the most of your options.

Getting a summons at the start of a lawsuit is a routine legal process. Once you understand what's involved, you can decide the best way to respond. 

One option is ‌debt settlement, when you negotiate with a creditor to pay less than the full amount you owe.

Debt settlement allows both you and your creditor to avoid the time and expense of a trial. Many creditors would prefer to work something out instead of going through the legal process, and may agree to accept less than the full amount owed. 

Until a settlement is reached, stay on top of any court papers and prepare for the case to go to trial. Even as you do this, though, you could also pursue the opportunity to settle.

By both keeping up with the legal process and trying to find debt relief outside of that process, you leave all your options open. That may allow you to make the best of a difficult situation.  

This information is intended for general informational purposes only. It shouldn't be taken as legal advice. For personalized legal advice, consult with a qualified attorney licensed to practice law in your state.

What Happens After You've Been Served: the Legal Timeline

Receiving a summons is the first step in a legal dispute. Even once that process has started, you still have a chance to try to negotiate a settlement. Until a settlement is reached, keep up with the steps in the legal process.

Being sued for debt is a civil complaint, a way to settle a private dispute over legal responsibilities, such as paying a debt that's owed. It’s not like being charged with a crime.

The person bringing the lawsuit is the plaintiff, and the person being sued is the defendant.

When you're served, you'll receive two documents. One is the summons, which tells you that you're being sued and you’re required to appear in court. The complaint outlines the legal reasons for the lawsuit and what remedy is being sought. 

The summons will give you a deadline to respond, such as 30 days. If you ignore the deadline, the judge is likely to issue a default judgment against you. That would give the plaintiff the right to collect from you any money awarded by that judgment. 

Responding within the deadline keeps your legal options open. It may even give you some bargaining power to negotiate a settlement.

From this point on, keep pace with your legal situation while you work on settlement negotiations. 

The first step in the legal strategy is how you’ll respond to the summons. Then you’ll come up with a more detailed legal defense. 

To help you defend yourself, you'll be able to request information from the plaintiff, which is called discovery. 

Eventually, the judge will set a date when you'll be able to make your case in court. Once both sides have had their say, the judge will make a ruling on the case. 

Depending on how complicated the case is and how crowded the court schedule is, this process can take anywhere from months to years. That gives you time to pursue debt settlement. 

Your strategy for negotiating a settlement may change as the legal process goes along and you learn more about the case against you. At any time, if you're going to negotiate a settlement you need to have something to offer. As soon as possible, start putting some money aside as a potential settlement fund. 

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Step-by-Step Guide: How to Answer a Summons for Credit Card Debt

The legal process can go on for a long time. First, respond to the summons. Make a note of the deadline in the summons, and follow these steps.

1. Review the complaint

The complaint may have a lot of legal language, but right now you're just looking for some basic facts:

• Who is suing you? Do you recognize the name of the organization, and do they have reason to be claiming money from you?

• Why are they suing you? What legal obligation do they say you failed to fulfill, and what evidence do they mention?

• How much are they suing you for? What's the amount of money they’re claiming, and what are they basing that amount on?

Understanding the complaint lets you know what you're up against. That can give you some ideas about how to respond. 

2. Decide whether to get legal help

When you get sued, it’s a good idea to consult with an attorney licensed to practice in your area. Lawsuits can be complicated, and making an error could hurt you. 

Hiring a lawyer can be expensive, but there are resources for free or low-cost representation for people with limited resources. Check with your local legal aid society, which you can locate through the national Legal Services Corporation.

3. Gather information

Pull together all the information you have about the debt in question, which may include the original agreement for the account, credit card statements showing payments due and balances owed, and records of payments.

Compare your records with the information in the complaint. Here are some details to check:

• Whether the debt is yours

• How old it is

• How much you actually owe

You have the right to request debt validation from a debt collector. It’s their responsibility to prove that you actually owe what they say you owe. Unless they can come up with that proof, they don't have a very strong case. Requiring that validation may also help with debt settlement negotiations. 

4. Decide on your legal response

Based on the information you find, you can respond in the following ways:

• If the information is accurate, you may admit to it

• If the information is inaccurate, you can deny it

• If you don't have enough information to determine whether a claim is accurate, you can say so

You can respond to each individual claim in the complaint. So, for example, you may admit to some while denying others. 

An attorney can help you with possible legal defenses to the complaint. Depending on the nature of that complaint, possible defenses include:

• The statute of limitations has expired

• Identity theft

• You already paid off the debt 

• You have no business relationship with the debt collector

• You have filed for bankruptcy

• Court officers didn't serve you properly 

• You don't owe the money because you’re an authorized user on a credit card, not the account owner

• The plaintiff improperly added interest and fees to your original debt

5. File your response accurately and on time

There may be a form or other instructions about how to respond. Generally, your response will include:

• Your personal information, such as name and address

• The case number in the summons

• Your point-by-point response to each claim in the complaint

• The legal basis for your defense

• Your request for relief (such as asking the court to throw out the case or lower the amount of money you owe)

Answer truthfully. You don’t have to provide any more information than is necessary to address the specific points in the complaint.

File your response in person at the court and ask for it to be date-stamped. Also, bring two copies and have those date-stamped. Send one copy by certified mail to the plaintiff's attorney, and keep the other for your records.

Negotiating Debt Settlement After Being Served

As well as protecting you from a default judgment, responding to the summons has another advantage. It shows you’re willing to fight the lawsuit, and this could put you in a better position to negotiate a settlement.

The debt settlement process is separate from the legal process. You might want to hire a debt settlement specialist to handle those negotiations on your behalf, even while your attorney takes care of the legal process.

You and a debt settlement specialist may decide to reach out directly to the plaintiff to negotiate a settlement. After all, the creditor or debt collector suing you may be more motivated than their lawyer to settle the lawsuit to avoid legal expenses. 

Here are some important elements to a successful settlement negotiation:

• Demonstrate that you don’t have the financial means to pay what you owe.

• Let the creditor know if you have other creditors. If so, they may be eager to grab a settlement before other creditors use up all your money

• Offer something specific. Ideally, this is a single lump sum settlement. If not, a payment schedule over time.

Be prepared for some back-and-forth. It might be best to hold back on your best offer, so you have some wiggle room for responding to a counteroffer.

If you’ve been working with a professional debt settlement company, that relationship could come in handy if you’re sued for a debt that you enrolled in your debt settlement program. Experienced debt settlement negotiators have an advantage because they’ve been through this process many times,  and they have a sense of what creditors will accept.

At Freedom Debt Relief, we offer a legal benefit to program members. If a creditor takes legal action against you for an enrolled debt, Freedom Debt Relief may engage a Legal Partner Network attorney who will work on negotiating a settlement. 

This service is free for qualifying clients who have made their monthly deposits on time. The offer doesn’t  apply to legal action taken before you enrolled, or to legal action taken on debts that aren’t enrolled in the debt settlement program. 

However you arrive at an agreement, no settlement is final until it’s put into a signed, written agreement and you have satisfied the conditions of that settlement. Until that’s nailed down, meet any deadlines in the legal process.

Payment Options for Settling a Debt After a Summons

You can make two types of financial settlement:

• A one-time, lump sum payment. This depends on having the resources available to make this payment.

• Payments over time. Figure out how you’ll be able to meet the payment schedule before agreeing to it. 

An offer of a lump-sum payment may have a bigger impact. A lump sum is basically a bird in the hand: It gives the creditor a sure thing as soon as it's paid. Otherwise, they have to worry about your ability to make future payments. 

Settling a debt could affect your credit report and your taxes:

• When you settle a debt for less than the full amount owed, a record may stay on your credit report for up to seven years. If you've been having payment problems you may already have damaged your credit, so the impact might not be huge. Settling a debt could give you the financial relief you need to start rebuilding that credit record. 

• Any portion of your debt that’s forgiven or canceled could be treated as taxable income, and you may have to pay tax on it. However, there are exceptions for bankruptcy or insolvency. 

Strategies When You Can't Afford to Settle Credit Card Debt

If you don't have enough money to make an acceptable settlement offer, you have a few other options.

Bankruptcy

If you have multiple creditors and no realistic hope of paying what you owe or settling with them, bankruptcy may be your best way out.

Depending on the type of bankruptcy, this can stay on your credit report for seven to 10 years. Bankruptcy could provide an orderly process for having a court decide how to deal with your debts. In some cases, that may be the quickest path to rebuilding your credit. 

Rely on judgment-proof status

The phrase judgment-proof is often used, and it's a little misleading. To be clear, nothing can protect you from being sued for debt you actually owe. If you lose, you’ll still have that on your record. However, the plaintiff may not be able to collect anything.  

Federal laws limit how much and what type of income can be garnished, and some states apply even stricter limits. Some states also protect a certain amount of your property. 

If you have no job or a low-paying job, and little in the way of property, there may be no money available for a plaintiff to collect. Also, certain types of income are protected from collections, such as:

• Social Security retirement benefits

• Social Security Disability Insurance

• Supplemental Security Income

• Public assistance

• Unemployment benefits

• Veterans’ benefits

• Federal employee and civil service retirement benefits

• Child support

Whether or not you are judgment-proof also depends on the type of debt you have. If you have secured debt, the creditor is entitled to the property that secures that debt if you default. Credit card debt is unsecured. If you have little property and only exempt income, a creditor may not be able to collect something from you for credit card debt.

In fact, creditors are less likely to incur the expense of suing you if they realize there’s little for them to collect if they win. 

After Settlement: Moving Forward with Confidence

One of the benefits of debt settlement is it can give you a reset. You can regain control of your finances and rebuild your credit record.

In order to benefit from your reset, take care of a few key details:

• Document any debt settlement agreement. You should have a formal agreement that details the account involved and the terms of the settlement. It should be signed by someone authorized to represent the creditor who claimed the debt.

• Make sure the lawsuit has been dropped. You should receive notice of this from the clerk of the court in which you were sued. It should be part of the court's formal records.

• Check and monitor your credit reports. There are three major consumer credit bureaus: Equifax, Experian and TransUnion. Check to see that the debt is recorded as settled on the records at all three. This may take a few weeks. After that, continue to monitor your progress in improving your credit record.

• Handle the tax liability on settled debt. Unless you have declared bankruptcy or are insolvent, you’ll need to report forgiven debt as income on your tax return. It’s a good idea to talk to a tax professional about your situation. 

Keep records on all the above. That way, if anyone tries to collect money or revive a lawsuit in connection with a debt that's been settled, you can prove that they no longer have that right.

Getting Help to Settle Credit Card Debt After Being Served

Getting sued is upsetting, but you don't have to go through it alone. 

Get legal advice to make sure you handle the lawsuit properly—plenty of free or low-cost options for guidance are out there. You can also get help with reaching a financial settlement. A debt relief specialist like Freedom Debt Relief can examine your situation and explain your options to you. The initial consultation is free. 

Using credit is a big part of rebuilding your credit record, but only use it once you've figured out how you're going to repay what you borrow.

As you learn to handle your finances and manage debt, you may find you breathe more easily and step more lightly. That's when you'll know your problems have truly been settled.