Wednesday, February 1, 2023

Can You Be Taken To Court For Credit Card Debt

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First Steps For Handling Credit Cards After Death

Credit Card Company Is Taking Me To Court!

The executor of a deceased persons estate will usually have a long list of people to notify of a persons passing and, when appropriate, accounts and outstanding balances to close out on the behalf of the deceased. Because credit card debt is considered unsecured debt, it is among the last on the priority list of debts to be paid from whatever assets exist in the estate.

Those responsible for an estate should notify credit card companies as quickly as possible so no additional charges are made on the account. This will help protect against recurring automatic charges as well as potential fraud in the event a credit card is stolen.

How Debt Can Lead To Jail

According to the federal Fair Debt Collection Practices Act, debt collectors collecting debts for others are prohibited from engaging in abusive or harassing conduct, and that includes threats of sending you to jail. However, if you do not pay your debts, your creditors can sue you in court.

In Ohio, you have 28 days to answer or respond to a complaint by creditors. If you dont file an answer, if you overlook a legal summons and complaint, or if you dont show up in court when you are supposed to, the creditor can win the case by default and receive a judgment against you.

The court can then take steps to make you pay. Courts can order the garnishment of your wages or your bank account and allow creditors to seize some of your personal property and put a lien on your real estate. Ohio law provides an exemption for a certain value of your residence, for medical debts, and limits for personal property and for a vehicle, but anything over the exemptions can be used to satisfy creditors.

If creditors still cant get money from you, the courts can order you to appear in court where, under oath, you must answer questions about your finances and why you havent paid that creditor. If you fail to attend, the court can find you in civil contempt.

If you do not pay or follow the courts orders, you may be found in contempt of court and have a warrant for failure to obey a court order.

If You Dont Owe The Debt

When you’re sued for a debt you dont owe or for an amount you dispute, two words can give you a strong defense: Prove it. At the hearing, you can ask the creditor to provide the original debt contract and to prove why you owe the amount specified. If it cant, the judge may dismiss the case.

Adequate documentation is key, but also seek the help of a qualified legal professional to help you navigate this process.

A lawsuit for a debt you dont recognize may be the result of identity theft, so you may want to check your credit report for activity you dont recognize.

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How To Negotiate A Settlement Before Going To Court

If the debt is active and valid, try to stop the lawsuit by contacting the creditor or the attorney listed on the summons to discuss a settlement. You might offer to pay some of your debt with a lump-sum payment or in monthly installments. Come up with an amount that you can afford and that you think the creditor or collector will accept. If you offer a lump-sum payment, you may need to have that money ready quickly.

You or the debt settlement company youve hired may have to go through several rounds of negotiations before a settlement is reached.

I Am Being Sued For A Credit Card Debt Now What

Received Court Summons Credit Card Debt

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In a Nutshell

A credit card company is suing you for unpaid debts. What do you do? This article explains how to handle a credit card lawsuit, different defenses you can use, and what to do if a judgment is entered against you.

Written byAttorney John Coble.

A credit card company is suing you for unpaid debts. What do you do? This article explains how to handle a credit card lawsuit, different defenses you can use, and what to do if a judgment is entered against you. This article will also deal with how bankruptcy may be able to help you.

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Sued For Debt Heres What To Expect

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A letter arrives from a law office threatening a lawsuit for payment on an old bill. It’s upsetting, but hardly rare.

You may get hit with a debt collection lawsuit if you have old, unpaid medical, credit card or other consumer debt. If you dont respond in time or attend the court hearing, the creditor is likely to win and may get the right to take part of yourwages or bank account.

S To Take If You Are Sued By A Collection Agency

If you are sued by a collection agency, it will be important to review the complaint very carefully and check that everything in the complaint is accurate. Some questions youâll want to ask yourself include:

  • Is this debt yours?

  • Is the amount of money they are claiming correct?

  • Has the statute of limitations run?

The biggest mistake you can make is to ignore a lawsuit from a collection agency. When a complaint is filed, you must answer the complaint within a certain time. The time in which the complaint must be answered is dictated by state law. You can either hire an attorney to help you answer the complaint or represent yourself pro se. It is important to deal with your financial issues head-on, as doing so will help you avoid the worst possible consequences under the circumstances.

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Contact The Creditor’s Attorney

Consider contacting the creditor’s attorney to ask for a settlement as many attorneys are prepared to offer an arrangement that allows you to pay a reduced amount, sometimes over a period of time, Maurice said.

When you contact the creditor’s attorney, you can also request to be sent information about the debt including the full name of the creditor, the phone and address, best address for sending correspondence, and any information about the debt they can provide. Follow up your request with a letter, saving a copy for your records.

Bankruptcy After A Collection Lawsuit

How To Get Out Of Paying Credit Card Debt | Gamez Law Firm

Bankruptcy stops all collection activity. This includes lawsuits. The automatic stay of §362 of the Bankruptcy Code is what stops all collection activity. This pause in collection activity is necessary to give the court time to figure out what’s dischargeable and what’s nondischargeable in bankruptcy. If a debt is discharged in bankruptcy, the prohibition on collecting the debt will become permanent.

Secured debts can only be discharged in a Chapter 7 bankruptcy by surrendering the collateral. Unsecured debts are those that are not secured by collateral. For example, if you have a car loan, it’s secured since the car is the collateral securing the creditorâs interest in the loan. By contrast, credit cards are usually unsecured since there is no collateral associated with these accounts.

Since credit card debt is usually unsecured, a Chapter 7 bankruptcy can eliminate these debts with no issue. However, if the credit card company gets a judgment against you and then records that judgment, it becomes a judgment lien. Judgment liens are treated as secured debts. With a judgment lien, this collateral can include everything you own to the extent you have non-exempt equity in those assets.

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Is Your Credit Card Debt Out Of Control Clark Howard Says This Is How You Can Pay It Off

Is your credit card debt out of control? Clark Howard says this is how you can pay it off With interest rates climbing, it can seem impossible to keep up with monthly payments.

ATLANTA Inflation continues to drive the price of just about everything up and many Georgians are racking up huge credit card balances because of it.

With interest rates climbing, it can seem impossible to keep up with monthly payments.

Channel 2 consumer adviser Clark Howard says there is a way to pull yourself out from under this burden.

Howard spoke with one man who told him how he was able to pay off nearly $100,000 and how you can do the same thing with yours.

Its kind of been the lifeline for some things, consumer Jomahl Gildersleve said.

According to the Federal Reserve Bank of New York, Americans owe nearly $900 billion in credit card debt.

Inflation has stretched household budgets in a way that we havent seen in a long, long time. And a couple of the consequences of that are more and more households are running down the savings that have been built up during the pandemic and running up the credit card debt that had been paid down during the pandemic, said Greg McBride, chief analyst with Bankrate.

Demetrius Thrasher understands how quickly credit card balances add up. As a member of the U.S Navy, living abroad he didnt think twice about his spending.

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Taking Your Credit Card Company To Court

Many creditors have disagreements with their credit card company. Whether it’s a disputed charge, a surprise annual fee, or a shift in the interest rate, disputes are bound to happen.

When an issue arises, most user agreements mean consumers are obliged to resolve those disputes via arbitration rather than lawsuits. But those days may be over.

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Is There Anything I Can Do To Avoid Being Sued Over A Debt

If you get a 30-day demand letter, you may want to send a letter back to the creditor. Do this before the end of the 30 days. This could prevent a law suit.

You can do a few things in your letter:

  • If you don’t think you owe the debt, say why you believe that you don’t owe the debt.
  • You can try to convince the creditor to stop trying to collect the debt because your income and assets are exempt
  • If you know you owe the debt, and you can pay, you can offer to pay a lump sum or to set up a payment arrangement.

You have the right to ask for:

  • the amount of the debt
  • the name of the creditor they say you owe
  • proof that the debt exists
  • the name and address of the original creditor, if different from the current creditor

If the demand letter does not give this information, ask for it.

Finally, in your letter, explain any legal defenses that you think you may have. Read more about legal defenses. If the creditor’s lawyer agrees with your defenses, they may decide not to sue you.

Here is a sample letter disputing the debt and asking for “validation” of the debt. You can use this as a model. You can add any other legal defenses you may have, like an expired “statute of limitations,” or that you are “collection proof” because of your low income and minimal assets.

Check Local And State Debt Collection Laws

How Bankruptcy Can Help Rebuild Your Credit Score

On top of federal law, several states and cities have their own debt collection regulations. Be sure to carefully read the contract that you have with your lender, which will include information about how they can contact you. If they violate this contract or any law, you can file a lawsuit against them.

Recommended Reading: How To Build Credit Fast With Secured Credit Card

Prevention Is Better Than Cure

Dont let a debt collect double, triple or more the amount you owe by not responding. You should communicate with your creditor or lender. They may be able to offer you alternative solutions that will ease you from further financial obligations. Along with this, the debt collection agency may be willing to work with your situation if your lender puts in a word for you. They could develop a more affordable repayment plan that is appropriate for your financial condition.

What Rising Interest Rates Mean For You

New, higher rates will apply to almost all credit card borrowers within a month or two, predicts Ted Rossman, senior industry analyst at CreditCards.com, which is owned by Red Ventures, like NextAdvisor. Every card issuer has slightly different rules about changing cardholder APRs, and the increase usually depends on your billing cycle. But you may see a difference as early as your next statement or the one after.

As for how much higher your APR will be, dont expect a drastic change at least not yet.

Rossman does predict credit card issuers may increase APRs a bit more than the Feds rate hike to offset their own risk.

Today, the average credit card APR is around 16%, but Rossman says more rate increases this year could push the average credit card interest rate over 18%.

Be prepared forseveral rate increases, Harzog says. Thats more than enough incentive than you need to start paying down that debt you have, and if you dont have credit card debt count yourself lucky right now.

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Know The Statute Of Limitations Of A Debt In Your State

The statute of limitations tells you how long the maximum time the parties involved have to initiate legal proceedings from the date of an alleged offense, in this case, your debt. The statue of limitations on debt will vary from state to state. Typically this is four to six years. If the statute of limitations expires, the debt collection agency will not be able to sue you anymore. However, this does not eliminate your outstanding debt. You are still fully responsible for the debt you owe. Meaning it will stay on your credit report.

Reply To The Notice Of Claim

How to respond to a court summons for credit card debt?

This is the single-most important thing you can do reply to the notice of claim! Whatever your financial situation, however you arrived at this point, the one thing you shouldnt do is ignore the claim. Where possible, you should seek legal advice, either on your own or by contacting a Legal Aid organization in your province.

If you dont respond within the allotted time frame in the appropriate way, the claimant can get what is called a default judgment. A default judgment can lead to garnishment of your income or a lien against your property without further notice to you.

Usually the documents you received should also include the documents you need to file a response, as well as a guide to completing those forms. If you cannot find those documents, contact the court directly and ask how to file a response. Please make sure youre contacting the correct court!

Also Check: How To Add More Money To Credit Card

Transferring Points And Rewards

Depending on the credit card company and the types of rewards programs a person uses, some points can be transferred or reinstated to a new account holder after death. Not all companies have policies for point transfers, so be sure to check to see what specific options are available before deciding exactly what to do with the deceaseds account.

American Express, for example, will reinstate points to a new account or allow them to be redeemed by the estate, but if the credit card account is canceled beforehand, the points are forfeited. Bank of America, Chase, Citi and Discover all have policies for how to redeem and/or credit points back to the estate upon presenting proof of death. Wells Fargo does not transfer points or rewards after death and all points are forfeited upon account closure.

An executor may be able to request the transfer or cash out miles and other travel rewards such as hotel or airline points from a deceased persons accounts. This depends on the program and whether a card issuer or program allows transfer beneficiaries.

If you have earned a lot of points and think it would be worthwhile to pass them on to your estate or specific loved ones, the best thing to do is to name your desired beneficiaries for these accounts. This will help prevent automatic points forfeiture and will also help these loved ones obtain easy access to your accounts if they need to.

If The Debt Should Be Less

You may accept that you owe the debt but disagree with the amount.

Ask for an itemised statement of your account that sets out:

  • the amount and date of the alleged debt
  • how it has been calculated
  • details of all payments made and amounts owing. This should include principal, interest, fees and charges.

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Im Struggling To Pay Off My Credit Card Debt Can My House Be Taken Away From Me Because Of This

The short answer is no. However, there are some nuances to it which you definitely need to be aware of.The first thing to keep in mind is that there are mainly two types of debts: unsecured debts and secured debts.

A secured debt is one in which one of your assets are tied to it as security. This means that your creditor has the right to take those assets away from you in case you start falling behind on your payments.

Some examples of secured debts are:

  • Hire purchase agreements for any item that may have been bought using that agreement.

Thus, in all of these examples, the creditor has some form of security to fall back on in case you are unable to pay back the money you owe.

Unsecured debts are ones in which no form of assets are included in the form of security for your creditors. If you start falling behind on your payments, your creditors have no right to seize any of your assets. They can, however, take court action against you and try to get you to pay the money you owe that way.

This is usually a last resort for most creditors and only occurs if theyve completely exhausted every other avenue of making you pay back the money you owe.

Some examples of unsecured debts are:

As you can see, credit cards are one of the prime examples of unsecured debt.

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