How to settle Cavalry SPV credit card debt before a default judgment

Cavalry SPV I LLC is a debt buyer. It buys charged-off credit card accounts. It then collects on them through Cavalry Portfolio Services LLC, its servicing arm (NY Department of Financial Services). Cavalry sues a lot. Were you served with a summons and complaint? Your Answer deadline is the most important number on the page. The window is 20 to 30 days from the day you were served. The exact number depends on your state (CFPB: I was served with a lawsuit). File an Answer in that window, and Cavalry will almost always talk. Miss it, and the court can enter a default judgment for the full balance plus fees.

The American Express handoff most guides miss

Cavalry is a top buyer of charged-off American Express accounts. Amex tends to keep past-due accounts in-house for 12 to 24 months before it sells. That is much longer than most issuers. Its in-house team has higher recovery rates (CFPB Consumer Credit Card Market Report, 2023). When Amex finally sells, Cavalry is one of the names that shows up on the new statement.

Did your account start as Amex and now sit with Cavalry? Expect two things. First, the original balance has likely added one to two years of interest and fees. Second, the chain of title — Amex to Cavalry SPV — must be proven in court. That is a common weak point for debt buyers (FTC: The Structure and Practices of the Debt Buying Industry).

The 30-day Answer window

When you are sued, the court delivers a summons and a complaint. Your job is to file a written Answer with the court clerk by the deadline on the summons (CFPB: Responding to a debt collection lawsuit).

A basic Answer denies the claims. It forces Cavalry to prove the debt is yours, that they own it, and that the amount is right. Many state courts publish fill-in-the-blank Answer forms — for example, California Judicial Council Form PLD-C-010 and New York's consumer credit Answer form.

Ignoring the suit is the worst option. A default judgment can lead to wage garnishment, bank account levies, and property liens. Those liens can stay on record for 5 to 20 years, based on state law (CFPB: What is a judgment?).

Settlement math: 40 to 60 percent lump sum

Cavalry tends to settle for 40 to 60 percent of the balance in a single lump-sum payment. Multi-payment plans tend to run 5 to 10 points higher. Leverage shifts with timing:

Before the lawsuit is filed. Cavalry will often take 30 to 50 percent because the next step is to pay a law firm to file.
After service, before judgment — the highest-leverage window. Cavalry knows you can fight the chain of title. 40 to 55 percent is common.
After a default judgment. Leverage drops fast. Settlements move to 60 to 80 percent, sometimes the full amount. Cavalry can also collect through garnishment.

Get the deal in writing before you pay. Pay by cashier's check or money order. Never give Cavalry your bank routing number. Forgiven amounts above $600 trigger a Form 1099-C. The IRS treats that as taxable income unless you qualify for the insolvency exception (IRS Publication 4681).

Validate the debt first

Within 30 days of Cavalry's first written contact, you can demand written validation. The right comes from the Fair Debt Collection Practices Act, Section 809 (15 U.S.C. § 1692g, via CFPB Regulation F). Cavalry must stop collection until they send written proof of the debt. The proof must include the amount and the original creditor.

A validation request does not pause a court deadline. Have you been sued? File your Answer on time and ask for validation in parallel.

Statute of limitations defense

Each state sets a time limit on how long a creditor has to sue on a credit card debt. The window is 3 to 6 years from the date of last payment (FTC: Time-Barred Debts). Did Cavalry sue after the statute expired? You can raise the statute of limitations as an affirmative defense in your Answer. The case is then often dismissed.

A partial payment or a written promise to pay can restart the clock in some states. Do not pay anything on an old debt before you confirm where the statute stands in your state.

FAQ

Cavalry SPV is a debt buyer that purchases charged-off consumer accounts and uses Cavalry Portfolio Services to collect.

Sources

This article is for educational purposes and does not constitute legal, tax, or financial advice. Consult a licensed attorney before responding to a lawsuit in your state.