No one wants to be in a position where you cannot pay your bills. However, sometimes a situation occurs that is completely out of your control and you have to decide what bills to pay and what bills not to pay. In that situation, there are three things that become the priority: having food to eat, having a place to live and being able to get to and from work.
Another situation that occurs is job loss that leads to people using their credit cards to live on, or unexpected medical bills that can also lead to maxed credit cards. And yes, irresponsible use of credit cards can also lead to folks who are thousands of dollars of debt.
For many, even if they find a job or extra income today, have no hope of repaying in a timely matter. Read on to learn what happens when credit card companies sue.
What Makes a Credit Card Company Sue
No one knows when a credit card company will decide to sue over a debt. Some credit card companies will not sue for anything less than a thousand dollars while others will start the process for as little as two hundred and fifty dollars. There is no real way for you to determine if you are going to be sued; not until you get the knock on your door from the sheriff’s office with the legal papers.
Before a credit card company takes steps to sue you, they will usually try every other recourse to collect on the debt from constantly calling and trying to get you to relent and make a payment to offering you a settlement offer for less than the total amount owed.
If the credit card company thinks that you are holding out, they may take steps to sue in hopes of forcing your hand. The problem, however, is that if you do not have the money to pay, no amount of talking, settlement offers or court cases are going to change your situation.
You should be aware of your rights if you are in a situation where you are being sued or you are very behind on your credit card payments. Firstly, the credit card companies are not allowed to harass you. That means that they cannot yell at you on the phone or threaten you in any way. Unfortunately, there are those companies that will threaten to sue you or have you arrested and so on. These are illegal statements and should be reported to the Federal Trade Commission, the State Attorney General and the Better Business Bureau. Also, make sure that you document the date and time of any abusive phone calls and what was said.
Credit card companies are also not allowed to call you at work or outside of what is considered reasonable hours (this can vary from state to state but the average is 8am to 9pm). They are not allowed to share your private information with outside parties. For example, it is illegal for them to speak to your boss about your debt.
Not all credit card companies will become threatening towards you, in many cases they simply want to work with you and get their money. If you know that you cannot pay and you simply do not want to be contacted by the credit card company, then put it in writing and send it to them by mail (keep a copy for yourself) and they will be required by law to stop contacting you; however, that does not mean that you will not be sued.
What Happens When the Credit Card Company Decides to Sue
Firstly, you will receive a legal document, which will be handed to you in person by a sheriff. You should be polite and accept the document, the sheriff is only doing their job, which in part is serving legal notices. The legal notice, which will tell you that you are being sued, is called a Summons and Complaint notice.
On the summons, there will be the dates that you are expected to be in court. However, if you have the option to meet with the complainant’s attorney outside of court with an arbitrator that can make the official decision, then you may never go to court. Instead, you will meet with the attorney for the credit card company and an arbitrator who will try to help resolve the issue and make a decision if the issue cannot be resolved.
There are various opinions as to whether you should hire an attorney or try to handle the case on your own.
If you cannot pay something on your credit card, you probably cannot afford an attorney. And if you owe the money that you are being sued for, an attorney will only be able to tell you where to sign on the dotted line.
You do not need an attorney to negotiate a settlement or to explain why you cannot pay, so you may want to skip that extra expense. You can offer a settlement for yourself or negotiate payments as well. If this is a debt you do not owe, or the debt owed is the wrong amount, then you may need an attorney to fight in your corner and help you win the case.
In the end, everything boils down to two things, whether or not the debt is yours and how the judge rules. At that time of the ruling, there will be no decisions made on how you should repay, nor will a judge rule that your bank accounts be drained or that you sell your home. This is only part one where the judge determines whether or not you are liable for the debt.
How the Credit Card Company Gets Their Money
Here is the tricky part. Although it is possible, it is very difficult for a credit card company to get permission to garnish your wages or take money from your banking accounts. If you have a joint banking account and the other person on your account is not responsible for the credit card bill, then they cannot ever have access to that account. According to Consumer Credit Help, a credit card company will garnish your wages if the court allows them too. However, it is not common for a credit card company to be allowed access to your wages.
The court takes everything into consideration when petitioned to allow garnishment of wages. They will take into account your monthly obligations and your debt to owe ratio to see if you can live while having your wages garnished. Unless you are jointly sued with your spouse, their wages cannot be garnished in your stead. There are some cases where a judge will allow a lien to be put on your home so that in the event that you sell your home, your debt will have to be paid before you receive any money.
The fact that some credit card companies sue does not meant they all will sue, and typically, a credit card company will try to collect by any other means before considering taking on the fees of suing you. However, if you owe thousands of dollars, you can probably look forward to being sued by a credit card company or two.
What’s more, if you are sued and the credit card company wins the case, your credit report will show a judgment on it. Even if you pay it off, the judgment will show as a negative for up to twelve years.
There may be a couple of options for you if you find yourself in this situation. Option A is, if you own your own home then consider a home equity loan or refinancing your mortgage so that you can pay off your debts and roll that money into a much lower interest rate payment. If you are in a position where you are about to start a new job, you may want to consider applying for a credit card that will allow you to roll your debt onto a new card. This may or may not be an option for you, depending on how bad your credit is at this point.
However, you can use the free credit card “Chaser” tool to see if there is a credit card that meets your criteria. Get started comparing credit cards today!
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