Were you sued for Non-payment of a credit card debt in PA?
Places Where People are Sued
Our Pittsburgh lawyers explain the process and cost of defending a credit card lawsuit defenses and costs in Pennsylvania. This area of law pertains to breach of contract, requiring the plaintiff to plead and prove the elements of a contract regarding an alleged debt.
There are typically two different jurisdictions where you might have been sued for breach of an agreement, specifically a credit card debt contract. Each having different procedures. Suit occurs either before a magisterial district court (small claims court), listing the name of the magistrate/magisterial district judge). Or, it is on the County Docket in arbitration. There, the suit will have case number of “AR.” It will also list a date for arbitration in the County Court which, in Allegheny County, is the City County Building in Pittsburgh.
Magisterial District Court (Small Claims)
If you have been sued in the magisterial district system (small claims court), you need not appear for the hearing. In fact, your testimony at the hearing could be used to prove that you owe the debt. Often, the party with the burden to prove the debt cannot do so unless you provide testimony.
Plus, at the magistrate level, even if you win at this level, either party may appeal for any reason or no reason. Therefore lawyers often recommend that neither you — nor your lawyer — attend the small claims court hearing. Attendance can be waste of time and resources. One must track the thirty (30) day period to appeal and file your appeal within the time period.
Find the forms for the appeal at the office of your local magistrate.
You should have a lawyer handle the paperwork for your appeal, but the system is designed for you represent yourself at this stage if you follow the directions on the appeal forms, it will save you time and money if you closely follow the instruction on it. Some lawyers will prepare the appeal for you. Our firm does not. Our clients typically have no problem doing the appeal themselves. Then, once appealed, the case will go to the arbitration docket in the county court system.
This is where our firm will first get involved: when the case is on the arbitration docket. Other lawyers get involved earlier, but ours does not.
Arbitration Docket
A case can come to the arbitration docket via an appeal from small claims court (as mentioned) or you could be sued directly on the arbitration docket. You may skip small claims court altogether), which is where you may have been sued first.
Here, the Complaint filed against you is more formal and your duty to respond to the Complaint is serious.
Important Deadlines
Your lawyer should prepare and file the response, as this could get the case dismissed (if done correctly via Preliminary Objection described below) or your failure to file a timely response (or your response that admits something you shouldn’t). This could could cause a judgment to be entered against you without a trial or hearing.
You have twenty (20) days to file a response to the Complaint on the Arbitration Docket (or General Docket on the County Court System). Otherwise, a default judgment may be entered against you.
The twenty day period to respond starts when the Complaint was mailed to you, not when you received it.
Avoid a Default Judgment For a Credit Card Debt Suit
If you have received a “notice of intent to obtain judgment by default” your time is very limited. You only have ten (10) days from the date of the notice (not when you received it) to file your response to the Complaint. This is why a lawyer should do for you. If a default judgment is entered, you may petition to open it. You should contact a lawyer ASAP about a judgment against you. Our firm typically will not petition to open or strike a petition for judgment by default. However, this is often cost-prohibitive relative to the size of the debt.
Filing Preliminary Objections to the Complaint
Assuming there is no default judgment against you, and we have time to file Preliminary Objections, these are typically sustained in Court. Not that as of late, it’s been increasingly more difficult in Allegheny County to get the Complaint dismissed early, prior to the arbitration.
Here arguments for early dismissal: there is a requirement that the Plaintiff attach to the Complaint certain paperwork. If the paperwork is missing — which is often the case — the case can be dismissed by us filing a First Set of Preliminary Objections and presenting those to a judge. You need not attend. We charge a flat fee for the First Set of Preliminary Objections, to be quoted in our offer of engagement.
Our Objections are typically sustained by the Court. The Court, however, will often give the Plaintiff between 90 and 120 days to correct any defect in its lawsuit. If the defect identified in our First Set of Preliminary Objections, is not timely corrected through the filing of a timely Amended Complaint, then what? We get the case dismissed.
However, if the Plaintiff files an Amended Complaint that corrects the defect — or tries to correct the defect but fails which is typically the case — then what? We may need to file and present to a judge a Second Set of Preliminary Objections, for which will charge another flat fee.
Our fees are typically as follows: First Set of Preliminary Objections – $500
Second Set – $400
Third Set – $300.
Most of the time, the plaintiff will fail to produce the documentation in needs to go forward with a case against you. That said, approximately twenty (20) percent of the time, the Plaintiff is able to amend the Complaint. This allows the claims to survive. If that occurs, then you should give thought to settling the case, or start planning to attend an arbitration.
Should You Consider Settlement of a Credit Card Suit?
If you settle with the party suing you, there could be serious tax consequences for you. You should talk to your accountant about this because we do not give tax advice. Your accountant may tell you about being taxed on “debt forgiveness.” For example, let’s say you owe $21,000 to a credit card company. You settled the case for paying only $1,000 total. For tax purposes, you might have debt “forgiveness” — and therefore potential taxable income to you — of $20,000.
So your debt the the credit card company goes away, but now you have a debt to Uncle Sam.
Plus, if you settle, that often means you agree that the debt was legitimate, so the blemish may stay on your credit report. Conversely, if our lawyers defeat the debt at the arbitration. This means the debt was never legitimate from the outset as not properly payable.
Our lawyers have also been successful at showing that the interest you paid all these years was not proper such that you actually overpaid the debt. Think about it: add up all the late fees and interest rate you had been paying was not proper. With that, we seek a counterclaim for the overpayment of a client’s alleged “debt.”
For these reasons, many refuse settlement and instead plan to keep defending the case. Talk to us about additional defenses you may have.
If the Objections Do Not Get The Case Resolved
If you want us to file an Answer, New Matter and Counterclaim (stating that you overpaid the debt in whole or in part), then we typically charge a flat fee of $500.
Again, you may have overpaid the debt, by paying interest that was not proper. Hence, we may recommend a counterclaim by you against the party suing you.
Attendance of Arbitration
The claims against you and our possible counterclaims will go to an arbitration if our Preliminary Objections are not successful in defeating the entire case. Our lawyers charge an hourly rate to defend against a case heading for arbitration. However, that is not common for a case to go to arbitration. The vast majority are dismissed via preliminary objection, “without prejudice,” meaning, the claim can be brought again.
That said, the potential new suit is often untimely because of the four (4) year statute of limitations so the dismissal of the case “without prejudice” typically means the end of it.
Appeal From Arbitration – Credit Card Procedures
Time is on your side. Either side can appeal the arbitration for any reason or no reason, which could mean more expenses for you – and for the party suing you. Time is on your side. The party suing you does not make any money on the case until you stop appealing and pay a settlement, or if there is a judgment against by a judge or jury, which costs the plaintiff time and money.
Contact our litigation lawyers if your case is on appeal from arbitration as there are additional considerations at that point and different types of representation available.
