How to Win a Credit Card Lawsuit in Georgia
Whether you can win your credit card lawsuit, and how to do it, depends on the particular facts and circumstances of your case. This article should not be considered legal advice because each case is different. Instead, the information below should be considered as general information and should only be used for educational purposes. This article is specific to Georgia law.
The two types of Plaintiffs in a credit card lawsuit
First, you need to understand there are two different types of plaintiffs that could file a credit card lawsuit against you. (The plaintiff is the party that filed the lawsuit; you are the defendant).
One type of plaintiff is called an original creditor, and the other type is a third-party debt buyer.
An original creditor is the company that gave you the loan or credit. In a credit card case, this could be American Express, Capital One Bank, N.A., Discover Bank, etc. This is the company that issued the credit card and that you had the credit card agreement with.
A debt buyer is an entity that purchases debts from an original creditor, lender, or another debt buyer, and attempts to collect on the debt. If a debt buyer sues you, it means they claim to have purchased your debt and now own it (click here for more information about debt buyers).
You need to figure out what you consider a “win”
Next, you need to understand the different possible outcomes and figure out what you would like to achieve and what you consider a “win.”
There are many potential outcomes, and you should be aware of what they each mean and how they affect your debt. Below are most common possible outcomes when dealing a credit card lawsuit:
- Default Judgment
- Settlement Agreement
- Dismissal without Prejudice
- Dismissal with Prejudice
- Verdict for the Plaintiff
- Verdict for the Defendant
Most credit card cases end in a default judgment. A default judgment can happen if you are served with a copy of the summons and statement of claim or complaint (or if the plaintiff tells the court that you were properly served), and you fail to file an answer by the deadline. A default judgment may also be entered if you answer but fail to show up to the hearing.
Debt buyers count on default judgments. It allows them to garnish your wages (up to 25% of your paycheck, subject to certain exemptions) or put a lien on your property. They know that most people they sue will never answer the lawsuit or put up a fight. However, the more you fight the more expensive it becomes for them, thus decreasing their profits. Plus, they could potentially lose the lawsuit or be subject to counterclaims. They would much rather you just ignore the lawsuit and default.
Obviously, you want to avoid a default judgment. So, make sure to file an answer to the lawsuit within 30 days of being served and attend all scheduled court hearings. (If you miss the 30-day deadline, you may still be able to open the default so do not give up).
Settling your credit card lawsuit could be considered a win. This is probably the second most common outcome for credit card lawsuits.
If you settle the lawsuit, legal documents must be filed with the court. If you settle in a lump sum and pay before the hearing, then you may receive a dismissal with prejudice. This means that you paid the plaintiff the full amount of the settlement agreement, and they dismiss the case against you and cannot re-file it.
You could also enter into a settlement agreement that allows you to make monthly payments. If you do this, either a Consent Order or a Consent Judgment will usually be filed with the court (Tip: try to get a Consent Order rather than a Consent Judgment).
The Consent Order outlines the details of the settlement and provides that if you do not comply with the terms of the settlement agreement (meaning that if you miss a payment), the plaintiff will be entitled to a judgment for the full amount of the debt (minus any payments made under the Consent Order). This is why you want to make sure that you enter into a settlement agreement that you can afford.
Dismissal with Prejudice
There are two different kinds of dismissals. The first is a dismissal with prejudice. This means that the plaintiff may not file the lawsuit again. There are legal principles involved with why they cannot bring the same claims again in another lawsuit, but just remember that a dismissal with prejudice is usually a good outcome. If you are negotiating with a plaintiff, then you want them to dismiss the lawsuit with prejudice.
Dismissal WITHOUT Prejudice
A dismissal without prejudice means that the plaintiff has one more opportunity to re-file the lawsuit. They usually get this when they dismiss the lawsuit on their own, or if they have been unable to serve the lawsuit on the defendant. Sometimes a plaintiff will file a dismissal without prejudice because they want to buy time to get the documents they want to introduce into court and/or consider whether they really want to fight with you in court.
Just remember that if you get a dismissal without prejudice you may not be out of the woods yet, since the plaintiff can usually re-file the case.
Verdict for the Defendant
Note: For simplicity, we will call these “Verdict for the Defendant” and “Verdict for the Plaintiff”, but these outcomes really just mean that “Defendant wins” or “Plaintiff wins.” In addition to a “Verdict” the win could come styled as an “Order” from the judge and could happen at different times during the case. But these details are not important for the purposes of this article.
Perhaps the best possible outcome in a credit card lawsuit is a verdict for the defendant. This means that you won the case and the judge or jury determined that you do not owe the plaintiff anything. However, if you want to take your credit card lawsuit all the way to trial and get a verdict in your favor, that is very difficult (but not impossible). There are a few ways you could win a verdict for the defendant, such as: identity theft, the plaintiff could not prove that they own the debt, or the statute of limitations has passed.
It is important to determine whether you have been sued by a debt buyer or an original creditor because that will determine your defense strategy. (click here for more information about debt buyers). This is because a debt buyer must prove that they own your debt in addition to having to prove that you owe the debt. This is called “standing.” If a debt buyer cannot prove that they OWN your debt, then they do not have standing to bring a lawsuit, and you could win the case.
How do I show that a debt buyer does not have standing to bring the lawsuit?
A debt buyer must prove a complete chain of assignment, going back to the original creditor. Old debts can be sold several times before a debt buyer brings a lawsuit. The rules of evidence are very important here, and this is where it may be necessary to hire an attorney. If the plaintiff’s evidence is ruled inadmissible, then they may not be able to prove a complete chain of assignment, and thus they do not have standing to bring the lawsuit.
Verdict for the Plaintiff
This means that the party that filed the lawsuit wins and you owe them money.
With a judgment in its favor, the plaintiff can obtain a writ of fieri facias (or FiFa). The FiFa acts as to record a lien on the judgment debtor’s (the defendant’s) property. The FiFa allows the judgment creditor (the plaintiff) to have the Sheriff seize your assets. With a judgment and a FiFa, the plaintiff can garnish your wages (subject to several exceptions and exemptions), garnish your bank account, and/or put a lien on your property.
Obviously, you want to avoid a verdict in favor of the plaintiff.
How to get a credit card lawsuit dismissed
Ok, so we have gone over the different possible outcomes. You probably want to achieve either a dismissal with prejudice or a verdict for the defendant. How do you get these outcomes?
A lawsuit can be dismissed for a number of reasons. For instance, the plaintiff can dismiss the lawsuit voluntarily. Or the judge can dismiss the lawsuit “for want of prosecution” if the plaintiff does not show up to the hearing.
How to get a credit card lawsuit dismissed with prejudice
Remember, a dismissal with prejudice is what you want, since it means that the plaintiff cannot bring those same claims again in a new lawsuit.
One way to get a credit card lawsuit dismissed with prejudice is by settling the case and making a lump sum payment. If you can come to an agreement with the plaintiff to make a one-time lump sum payment, and you actually make that payment, the plaintiff should dismiss the case with prejudice (meaning they cannot sue you for that debt ever again).
Another way that you may be able to obtain a dismissal with prejudice in your credit card lawsuit case is to bring a valid counterclaim. There are several federal and state laws that protect consumers from debt collectors and other entities.
- Fair Debt Collection Practices Act (FDCPA)
- Truth in Lending Act (TILA)
- Fair Credit Reporting Act (FCRA)
- Fair Credit Billing Act (FCBA)
- Federal Trade Commission Act, § 5 Unfair or Deceptive Acts or Practices (UDAP)
- Georgia Fair Business Practices Act (FBPA)
The most common counterclaims for credit card lawsuits brought by debt buyers will fall under the Fair Debt Collection Practices Act and state laws (in Georgia, the Fair Business Practices Act). If you find a valid counterclaim under the FDCPA (or any other law), then you should make sure to raise that as a counterclaim in your Answer to the lawsuit and use it as “ammunition” against the lawsuit.
Why are counterclaims good for getting a debt collection case dismissed?
Counterclaims can you help you get your case dismissed because if the plaintiff is found to have violated the law, the court can order them to pay you damages. For example, under the FDCPA, a debt collector may have to pay statutory damages (up to $1,000), actual damages (including recovery for physical and emotional distress, out of pocket losses like lost wages or money unnecessarily spent), and attorney’s fees and court costs.
Debt collectors want to avoid being held liable for these damages, and usually don’t want to engage in a lengthy fight with a consumer lawyer (or a knowledgeable consumer), so they are often willing to dismiss their case if the defendant has a good counterclaim.
However, the FDCPA only applies to debt collectors. If the plaintiff that filed a credit card lawsuit against you is an Original Creditor (for example, Capital One, American Express, Discover), then the FDCPA does not apply and this will not work as a counterclaim. A lawsuit filed by an original creditor is much more difficult to have dismissed with prejudice.
The FDCPA may also apply to the law firm that filed the lawsuit. If the law firm is a debt collection law firm that regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another, then the law firm will probably be subject to the FDCPA.
How to get a credit card lawsuit dismissed without prejudice?
You may be able to get a lawsuit dismissed without prejudice if you simply put up enough of a fight and give the plaintiff enough of a headache. The more you fight and the longer you can make the case go, the more likely the plaintiff will be to dismiss the case. Remember, debt collectors want to get quick wins, either settlements or default judgements. Those are the most profitable outcomes for debt collectors. The more they have to work to win their case, the less profitable the lawsuit becomes.
If you did not file any counterclaims, then the plaintiff can voluntarily dismiss the case whenever they want prior to the trial. They do not need your permission or the court’s permission. Because this type of dismissal acts as a dismissal without prejudice, they can file the lawsuit again. But if they dismiss the case a second time, then they cannot bring those same claims again.
Plaintiffs will sometimes file a voluntary dismissal if the defendant shows up to court ready for trial and the plaintiff is not ready (they will usually request a continuance to get the hearing rescheduled and buy more time).
The plaintiff may not be ready if they did not bring either a witness or a business records affidavit under O.C.G.A. § 24-9-902(11). If they do not have one or the other, then they should not be allowed to enter any evidence at trial, and they should lose the case.
IMPORTANT NOTE: if your case goes to trial, you need to make sure to properly object to any evidence that the plaintiff or their attorney attempts to introduce that may be inadmissible. It is not the judge’s job to object for you, and they have no obligation to help you out or inform you of your rights or the rules of evidence and civil procedure.
You may be asking yourself: Why would a lawyer show up to court without being able to introduce evidence? Well, they almost never bring a witness because the company that claims to own your debt is usually from out of town and it is infeasible and too expensive to bring a witness to each case, which would eat into their profit margin. (Remember: debt buyers file thousands of cases each month). They may not bring a business records affidavit because they know that most cases will not go to trial but will settle in the hallway before court.
You should ask to see all their documents, and specifically ask to see their business records affidavit. If they do not have one, then you may not want to settle the case unless they are offering you very favorable terms.
If the plaintiff’s attorney tries to enter their documents into evidence without a business records affidavit or a witness, then you or your attorney should raise a hearsay objection. You or your attorney should also challenge the affidavit if the plaintiff’s attorney brings one and tries to use it to introduce evidence. Often, their affidavits are insufficient for several reasons.
How to win your credit card lawsuit if it goes to court?
If you do not settle the case and do not get it dismissed prior to court, and the case proceeds to trial (this is rare since the vast majority of cases are disposed of prior to this point), then you need to be prepared to defend yourself against the plaintiff’s allegations.
What does the plaintiff need to prove to win a credit card lawsuit?
- An Original Creditor needs to prove:
- You owe the debt;
- The correct amount of the debt.
A Debt Buyer needs to prove;
- You owe the debt;
- They own the debt;
- The correct amount of the debt.
But these are just the basics. Credit card lawsuits are usually brought under one of the following legal theories of recovery: “breach of contract” or “account stated.”
Breach of Contract
In Georgia, the essential elements of a breach of contract claim are (1) a valid contract; (2) material breach of its terms; and (3) damages arising therefrom. Brooks v. Branch Banking & Trust Co., 107 F. Supp. 3d 1290, 1295 (N.D. Ga. 2015). This is what the plaintiff must prove to win a breach of contract case.
If the plaintiff brings a breach of contract case, then you should demand to see the contract, often called the “Cardmember Agreement” (also referred to as “Credit Card Agreement” or “Terms and Conditions”). Georgia courts have held that a contract is created when the lender sends the consumer a credit card, and the consumer uses that credit card. The card itself constitutes a formal and binding contract. However, you want to see the terms and conditions of the contract. What is the interest rate? What constitutes a default? Which state’s laws apply to the agreement?
You want to demand to see the “Cardmember Agreement.” If the plaintiff cannot produce this document (usually because they did not purchase it along with all the debts they purchased), then they should not be able to win a breach of contract claim. You would want to argue that they cannot prove a breach of contract without the contract.
However, you must be careful. Skilled debt collection attorneys may call you to the witness stand and make you testify at trial. They can cross-examine you under oath in an attempt to get you to admit that there was a valid contract based on the rules around credit cards described above, that you breached the contract by not making the minimum monthly payments, and that the creditor was damaged in losing money.
If the debt buyer does not have the Cardmember Agreement (or whatever the contract is titled), then they will often file lawsuits on an “account stated” theory of recovery.
According to Georgia law, “An account stated is an agreement between persons who have had previous transactions, fixing the amount due in respect of such transactions, and promising payment.” Stone v. First National Bank of Atlanta,117 Ga. App. 802 (162 S.E.2d 217) (1968). An account stated generally arises where the debtor has an open account with the creditor and agrees to pay a statement submitted by the creditor. Agreement as to the amount and a promise to pay are essential requisites. Lawson v. Dixie Feed c. Co., 112 Ga. App. 562 (145 S.E.2d 820) (1965). Fowler v. Gorrell, 148 Ga. App. 573, 575 (Ga. Ct. App. 1978).
Thus, the elements of account stated are:
- Existing relationship between debtor and creditor;
- A mutual agreement on the amount owed; and
- A promise by the debtor to pay the agreed sum.
However, an account may become stated even without express agreement. If a statement of an account is rendered to the debtor and the debtor fails to object to it, the jury may be authorized to infer that the failure to raise an objection was an implied agreement that the account was correct, but this inference is not demanded as a matter of law.
In the context of a credit card lawsuit, there is usually never a promise to pay on behalf of the debtor. However, silence is typically deemed an implied promise to pay. Meaning that if the credit card company sends you a monthly billing statement, and you do not object to the statement, then your failure to object, or “silence,” can be implied as a promise to pay.
It is important to note, however, that a promise to pay may be either express or implied, but a failure to object to an account rendered does not require the jury to infer a promise to pay from mere acquiescence in the correctness of the amount. While such a failure to object may be considered by the jury, it is not to be regarded as final proof but only a means of proof having evidentiary value, and it is subject to explanation and denial by other evidence.
How to defend against a credit card lawsuit at trial?
Georgia courts are very creditor friendly. That means it will be difficult, but not impossible, to win your case if it goes to trial. It all depends on what evidence the plaintiff can introduce to prove their case and whether they can meet their burden of proof.
As the consumer/debtor you are on the defensive, which means you just need to show the judge or the jury, depending on which court you are in, that the plaintiff cannot meet the burden of proof.
The plaintiff in a civil lawsuit (such as a debt collection case) has the burden of proof at trial. This means they must prove their case through evidence, either witness testimony or exhibits.
The defendant should challenge any evidence that may be inadmissible. This is where the rules of evidence are very important. I cannot go over everything that could possibly happen at trial, but you should understand that the evidence rules are perhaps the most important part of a debt collection trial. You want to make sure that hearsay is not admitted, and that any witness testimony is based on the witness’ direct knowledge.
“Hearsay” means a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” O.C.G.A. § 24-8-801(c). “Hearsay shall not be admissible except as provided by this article; provided, however, that if a party does not properly object to hearsay, the objection shall be deemed waived, and the hearsay evidence shall be legal evidence and admissible.” O.C.G.A. § 24-8-802.
Although hearsay generally should not be admitted (as long as you properly object to it), there are many exceptions and exclusions to the hearsay rule. The most important exception, for purposes of a debt collection lawsuit, is the business records exception. This exception allows the admission of “records of regularly conducted activity” or business records, and is used in an attempt to admit the plaintiff’s documents, including account statements, cardmember agreement, bill of sale, etc.
The business records exception (O.C.G.A. § 24-8-803(6)) states that:
“The following shall not be excluded by the hearsay rule, even though the declarant is available as a witness:
(6) Records of regularly conducted activity. Unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness and subject to the provisions of Chapter 7 of this title, a memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, if
(A) made at or near the time of the described acts, events, conditions, opinions, or diagnoses;
(B) made by, or from information transmitted by, a person with personal knowledge and a business duty to report;
(C) kept in the course of a regularly conducted business activity; and
(D) it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness or by certification that complies with paragraph (11) or (12) of Code Section 24-9-902 or by any other statute permitting certification.”
So, in order to enter business records, the plaintiff needs to have a witness testify that the records meet the elements above (unlikely – they usually do not bring witnesses), OR produce a certification (usually in the form of an affidavit) that complies with O.C.G.A. § 24-9-902(11), which states:
“Extrinsic evidence of authenticity as a condition precedent to admissibility shall not be required with respect to the following:
(11) The original or a duplicate of a domestic record of regularly conducted activity that would be admissible under paragraph (6) of Code Section 24-8-803 if accompanied by a written declaration of its custodian or other qualified person certifying that the record:
(A) Was made at or near the time of the occurrence of the matters set forth by, or from information transmitted by, a person with knowledge of such matters;
(B) Was kept in the course of the regularly conducted activity; and
(C) Was made by the regularly conducted activity as a regular practice.
A party intending to offer a record into evidence under this paragraph shall provide written notice of such intention to all adverse parties and shall make the record and declaration available for inspection sufficiently in advance of their offer into evidence to provide an adverse party with a fair opportunity to challenge such record and declaration.”
If the plaintiff produces a business records affidavit (sometimes referred to as a “902-11 affidavit”), then you want to make sure it complies with the elements above, and you also want to determine who signed the affidavit and which company they work for. You want to scrutinize and challenge the affidavit, because the affiant almost certainly does not have personal knowledge of the account and thus cannot swear that the documents meet the elements of the statute. Specific objections must be made based on the affidavit.
A note about magistrate court cases in Georgia
In a magistrate court case, “the judge shall conduct the trial in such manner as to do substantial justice between the parties according to the rules of substantive law. All rules and regulations relating to pleading, practice, and procedure shall be liberally construed so as to administer justice.” O.C.G.A. § 15-10-44(b).
This basically means that the rules in magistrate court cases are a little more relaxed. Plaintiff’s attorneys will attempt to use this to their advantage and try to enter evidence that would be inadmissible in State or Superior Court. You or your attorney should still make sure to object to the attempted introduction of any evidence that may be inadmissible under the rules of evidence and advise the judge that these basic rules are necessary to ensure due process.
Another feature of magistrate court cases is that either side can appeal the case to state or superior court, which creates a brand-new case. O.C.G.A. § 15-10-41. Although you cannot appeal a default judgment or a dismissal for want of prosecution after a nonappearance of a plaintiff for trial.
If you read this far, I hope that you found this information useful. Please do not rely only on this article for defending yourself against a debt collection lawsuit because there are many details, exceptions, exclusions, and nuances that are too numerous to explain in a single article. Do your research and consult an attorney for best results.
If you are interested in having the Parisi Law Firm represent you in your debt collection case, please call (404) 594-5130.