[COLUMN] What happens when you get sued for a credit card debt

Have your credit card debts become so large that you can’t even afford the minimum payments?  Or perhaps you’re already behind and your accounts have been turned over to collections? What do you do to get out of this financial mess?

If you are in this situation, maybe you’ve wondered about what the legal repercussions might be once you get to the point where you can no longer continue paying your creditors. Can credit card companies sue you for what you owe? And when they do, what happens when they get a judgment against you?  These are the questions I’m often asked by people who seek legal advice regarding their debts.

Of course, credit card companies don’t make it easy for you to catch up once you fall behind. They are quick to add on additional fees and demand that you bring your account up to date immediately by paying the current amount due, all past due payments as well as late fees. And if allowed by the agreement that you signed when you first applied for the credit card, your interest rate can also go sky-high upon default.  Before you know it, your debt problems have become a financial nightmare and your phone starts ringing off the hook with bill collectors harassing you at home and at work. What do you do at this point?

If your credit card debts have escalated beyond your control, perhaps you are getting nervous about what your creditors will do next. Can you be sued? Yes, you can be sued once your creditors are convinced that they have exhausted all other options to force you to pay. Of course, the benefit to be gained by suing you must outweigh the costs so the creditor will take that into consideration as well.  But most delinquent accounts are turned over to collection agencies in high volumes which significantly reduce the creditors’ litigation costs. Smaller companies like credit unions will also sometimes sue you in small claims court and they don’t even need an attorney to file the lawsuit.

I often see people who ignore their debts for a long time until one day they receive a summons at home or at work and only then do they realize the seriousness and urgency of their situation.  If you are sued by a creditor, it is very important that you do not ignore the lawsuit or you will regret the consequences once the creditor takes the next step of garnishing your wages, seizing funds out of your bank account, filing a lien against your real property or a combination of the above.

If your debts are small and you’re able to pay a reduced amount in a lump sum or in installments, it may be possible to negotiate with the creditor to prevent or stop an ongoing lawsuit. From my experience, depending on how far the debt is along the collection process, most creditors will settle for 30-60% of the original debt amount. It may be tougher once a lawsuit has been filed and the creditor knows that the collection potential is high based on your income and assets. It is important to know the best time to make an offer to get the lowest possible amounts.

If filing bankruptcy is your best and only option, it is best to seek legal help right away before your debt problems get worse. Spare yourself the suffering and the agony caused by debt if possible. In choosing a bankruptcy lawyer, remember that not all bankruptcy lawyers are created equal and may have different ideas on how to help you. It is important to choose a knowledgeable and experienced attorney who has your best interests at heart.  Most debt problems are solvable but often they get worse if ignored. Don’t make this fatal mistake.   If bankruptcy is not your best option, sometimes debt settlement can also be a way to avoid bankruptcy as long as you can come up with a realistic payment plan that your creditors will accept.

If you are in debt and have not figured out a way to get out, constant worrying will not get you anywhere unless you act to change your situation for the better. For a free consultation, call my office at Toll-Free 1-866-477-7772 and we will help you step by step in finding a solution that’s right for you.

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NOTE: Due to the current lockdown order caused by COVID-19, I am offering free consultations BY PHONE to anyone who needs help in dealing with their debt problems.

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None of the information herein is intended to give legal advice for any specific situation.  Atty. Ray Bulaon has successfully helped over 5,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE  1-866-477-7772.

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