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As debt relief attorneys, we have seen first-hand how credit cards can quickly spiral out of control. We know what it takes to help you find credit card debt relief. And most importantly, we know how to deal with credit card lawsuits brought by creditors against our clients.
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Why You Can Trust Bankrate
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here’s an explanation for how we make money. The content on this page is accurate as of the posting date however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authors alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
You Dont Understand Your Legal Rights
Not every credit card defaulter is aware of their rights or how to go about a court summons after being sued by a debt collector or creditor. For instance, you have a right not to be harassed through phone calls made by your creditor or be threatened in any way. More importantly, some defaulters arent even aware of the consequences of being served with such a lawsuit. Among the consequences of losing the lawsuit include seizure of personal property, garnishing your wages, as well as being ordered to pay accrued debt interest and court fees. A lawyer will help you understand all these and more specifics of the case.
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What To Do If You Owe The Debt
When youre sued, youll be served with a copy of the complaint and a court summons that tells you how you can file a response in court and the date of your court hearing. You have roughly three or four weeks to respond, which means you need to act quickly. Some of your options, like offering to settle the debt, can happen out of court. Others will require you to respond directly to the suit or use bankruptcy court.
Try A Balance Transfer Card To Get Out Of Debt
If your debt has not gone to collections yet, one option to help you save tons on interest and pay it off more quickly is to use a balance transfer credit card that offers 0% interest for a certain length of time . The options below all require at least a good credit score, so they are usually only effective to use before your debt falls into delinquency.
The Citi Simplicity® Card lets you pay off debt over a long period, with a 0% intro APR for 21 months on balance transfers from date of first transfer .
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How Debt Collectors Obtain Files
There are two ways debt collection agencies obtain accounts of unpaid debt either through assignments or they buy files.
Assignment of a debt means that a lender, like a bank or credit card company, has hired the collection agency to collect money on delinquent debts. In assignments, the collection agencies receive a commission, usually 30% of the debt they were able to collect on behalf of the bank.
Another way a debt collection agency can obtain unpaid debt accounts is by buying them. Lenders that are no longer trying to collect a debt will sell their debt accounts to a collection agency willing to buy them. The collection agency will then own the debt and begin contacting the debtor to recover money. This is often the case for very old debts which can explain why you may be receiving calls and collection demands from a debt collector after years of no contact.
Can A Credit Card Company Sue You
It’s stressful when you have trouble paying your credit card bills. That debt can feel like it’s hanging over your head, and it can lead to more financial issues the longer it goes on. If you’ve had an unpaid balance for some time, you may wonder — can a credit card company sue you?
Though it’s a difficult situation, there’s always a solution to . In this guide, we’ll cover your options if a credit card company is considering legal action or has already filed court papers.
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What You Should Do If You Can’t Make Your Credit Card Payment
If you know you won’t be able to make the minimum payment on your credit card, call the credit card company’s customer service department. You can find the phone number for your credit card company on the credit card itself or at the credit card company’s website. When possible, contact the credit card company before you miss a payment or send a partial payment. When you speak to the customer service representative, tell the representative that you won’t be able to make your minimum payment on time. If this has never happened before, make sure the customer service representative is aware of this fact. Request that the representative change your due date and ask if the company could waive your late fee. You can also ask if any other options are available.
If you know you won’t be able to make the required minimum payments for a while, find out if the credit card company can lower your interest rate, which would lower your monthly minimum payment. Your credit card company might also be able to temporarily reduce the minimum payment or even reduce the balance you owe.
If you need help negotiating on a debt, consider talking to a debt relief lawyer.
There’s ‘no Set Rule’ On How Long It Takes For Your Debt To Go To Collections
Six months is the general guideline, but according to Eweka there is “no set rule” on how many times you’ll get a phone call or letter before your debt is turned over to an agency.
“Sometimes, companies use collection agencies to service their debt collection process from the beginning, and other times it can take a longer amount of time,” says Eweka.
Check your at least once a year to reduce any surprise calls from collections, Eweka says. “Sometimes people do not even realize they have some of their debts.”
The three major credit bureaus are offering free weekly credit reports for the next year. They are available on AnnualCreditReport.com through April 2021.
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What Will Bankruptcy Do In A Credit Card Lawsuit
Bankruptcy puts a stop to any collection proceedings, including lawsuits, through the power of the automatic stay. Your creditors will be notified of the stay, so any wage garnishments or foreclosure actions also will stop.
Filing for Chapter 7 bankruptcy also can eliminate the personal liability associated with the judgment, which will clear your obligation to pay the debts. However, be aware that once a judgment attaches as a lien on your property, it will be harder to get rid of. For this reason, it is not a good idea to wait too long to act once a collections proceeding has been initiated against you.
You will not be able to sell the property until the lien is paid or removed, and in some cases, the creditor may sell the property to pay the lien. If the property is exempt , that lien can be removed pursuant to 11 U.S.C. Sec. 522.
This is not part of the ordinary bankruptcy procedure. While your bankruptcy is open, you must request your attorney to file a Complaint to Avoid Lien, such as this example in California there is typically an extra charge for such an action.
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What To Do If You’re Sued By Your Credit Card Company
How to react when sued by your credit card company depends on several things.
Aug. 3, 2013 & #151 — Whether the notice comes in the mail, or is delivered to your doorstep, being told that you are being sued for a credit card debt can be terrifying. For many people, the first reaction is to shut down and ignore the situation. “The tragedyis not that the consumer was sued but that most never respond,” says Steve Rhode, founder of GetOutofDebt.org who is also working on a research project about lawsuits filed over consumer debts.
If a debtor ignores the lawsuit, however, the , which in turn will provide the creditor with additional powers to collect the debt, including seizing bank accounts or garnishing wages, in some states.
How to react when you are sued by your credit card company depends on a number of things — including, first and foremost, whether you acknowledge that you owe the debt in question.
You Know You Owe
If you know you owe the debt and the amount is correct, there are a few different ways this can unfold.
If you can scrape together some cash perhaps with a loan from a friend or family member, for example, then one option is to pay or settle the debt immediately. “A reduction in balance owed or beneficial repayment terms are entirely possible outcomes,” says Rhode.
But you must act quickly.
There Must Be Some Mistake
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Other Important Notes About Collection Agencies
- You may be able to take action to stop calls from collection agencies and in some instances, creditors, debt buyers and law firms
- A creditor can only assign your outstanding account to one collection agency at a time
- Some law firms in Canada operate in virtually the same manner as a collection agency
- If your debt remains unpaid for more than six months, a collection agency representing your creditor might be prepared to negotiate a one-time payment for less than one hundred per cent of the outstanding balance typically, the older your account the more approachable a creditor might be
Consequences Of Not Making Minimum Monthly Credit Card Payments
If you stop making the payments on a credit card, there will be consequences:
- You may lose entitlement to rewards under the credit cards rewards program
- Your creditor will attempt to collect money from you
- There will be a negative impact on your credit score and your credit report
- You may experience adverse consequences from the right of set-off
- A Licensed Insolvency Trustee can legally protect you from the consequences of unpaid credit card debt.
If you are worried about the consequences of unpaid credit card debt, your first step is to make a commitment to speak with a Licensed Insolvency Trustee to explore your debt relief options.
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Can You Be Sued By Your Creditor
If you owe monies to your creditor and have stopped making payments as agreed, there is a chance that your creditor will sue you. However, launching a law suit isnt free your creditor will incur significant professional and administrative expenses. It is possible for a creditor to sue a debtor and not to recover a penny from them. Your creditor will be much more inclined to sue you if they are confident the odds are high that they will actually recover monies from you.
1. When might your creditor be inclined to sue you?
Your creditor might sue you under the following three conditions:
- The dollar amount owing is significant enough
- The relevant limitation period on the debt has not expired
- You own real property in your own name
Most large creditors in Canada will not sue regarding outstanding accounts of less than $4,000. This threshold for suing could be significantly higher depending upon the creditor.
Creditors are not likely to sue consumers if the relevant limitation period, or statute of limitations has expired such a suit would not likely succeed.
2. When might your creditor not be inclined to sue you?
To learn more about the likelihood of being sued, read the article, Nine Reasons Why Your Creditor Might Never Sue You.
3. What will a creditor do when it intends to sue you?
In event that a creditor wants to sue an account, it might do one of the following:
Tips For Handling Credit Card Collections & Lawsuits
There are a few ways in which indebted consumers can minimize the chances of a lawsuit, avoid losing one when brought, and prevent undue headaches in the aftermath.
- Try to Settle: If you have already defaulted on what you owe or are close to doing so, you can attempt to negotiate an amended payment agreement with your creditor. Your basic options are debt settlement and debt management .Both strategies have their corresponding advantages and disadvantages, and you can choose to handle each process yourself or with the aid of a reputable attorney or non-profit organization. In either case, adhering to an agreement reached with your creditor will eliminate the threat of a lawsuit .
- Open Your Mail: If youve been threatened with a lawsuit for outstanding credit card debt, you should begin paying extra attention to your mail. While your first inclination may be to open nothing in the hopes of hiding from your problems, that course of action makes you vulnerable to missing important communications and having a default judgment levied against you simply due to the fact that you didnt show up in court.The best way to avoid a judgment is to respond to the lawsuit, says Dalie Jimenez, an associate professor of law at the University of Connecticut School of Law, whose research focuses on consumer financial protection. The procedures on how to respond to a lawsuit are different in every state, but the notice of the lawsuit itself will indicate the proper way to respond.
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How Often Do Credit Card Companies Sue For Non
George Simons | July 21, 2022
Summary: Can’t afford to pay off your credit card balances? Wondering if you’re going to be sued? Find out how often credit card companies sue for non-payment.
Your credit card company will try to reach you if you fall behind with your payments. This is because creditors are allowed to pursue all means legally acceptable to collect their money from debtors. A lawsuit is also an option, but it is not usually the first legal measure creditors opt for.
You may fail to pay your credit for one reason or another. Often, some people begin to worry about being contacted or sued by a creditor for non-payment. But, quite frankly, creditors do not sue as often as many people think.
This is because lawsuits can be costly, time-consuming, and frustrating. This article explains what happens if you fail to pay your credit cards on time and everything else you need to know about late credit card payments.
When You’re Sued Over Your Credit Card Debt The Most Important Thing Is To Take It Seriously And Contact One Of Our Fort Lauderdale Attorneys
IGNORING DEBT collection calls usually doesn’t make them go away. Ignore your credit card debt long enough, and your credit card company may sell your account to a collection agency or sue you in civil court for the balance. While it’s best to try to work with your credit card company before a lawsuit is filed, it’s also important to know what to expect if you receive a summons and how you can respond to it.
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File An Answer To The Lawsuit
After speaking with a debt settlement attorney, you may decide it is appropriate to file an answer to the lawsuit. An answer is a formal written response that contests the suit.
You may be able to file an answer without retaining an attorney by completing forms available through the court or online and filing them yourself in court. Given that this is a serious legal matter, though, we do encourage retaining an attorney.
If you choose to file the answer, it is crucial to meet the deadlines as outlined by the court. Failing to do so can result in a default judgment against you.
Once youve filed your response, you will likely have a court hearing scheduled. In addition, this also buys you more time to work with the debt collector. You may be able to arrange a payment plan, settle credit card debt, or consider other legal advice your attorney may provide.
What To Expect When Your Credit Card Company Sues You
When your card issuer or a collection agency that has purchased your debt from the issuer can’t get you to pay your bill, a lawsuit seeks to obtain a court judgment, which may give the company the right to garnish your wages and bank account until the debt is paid.
In most cases, you don’t have to worry about going to jail over your credit card debt says Attorney Scott Fistel, a Fort Lauderdale Credit Litigation Lawyer at Fistel Law Group. “But if you don’t respond to a court order appropriately, you can be in contempt, and that can put you into jail.”
For example, if you fail to follow a court order to appear or to make a payment, you can be held in civil contempt of court, and the court can issue a warrant for your arrest.
The credit card company may not initiate a lawsuit as soon as you default on a debt. Fistel Law Group says creditors may try to collect debts for up to a year and a half before they sue. But she has also seen some companies notify customers of a lawsuit after as little as six months.
One factor that can influence the timing is the statute of limitations in your state. Some states allow creditors to sue over an unpaid debt for up to 15 years, while others permit it for three years.
A word of caution: Even if you respond to the lawsuit, the court could still grant a judgment. But if you respond, you have the opportunity to present your side of the case, and your arguments could affect the outcome.
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