Can I be sued by credit card companies?

Sued by credit card companyIf you are several months late on paying your credit card bill, or have simply told your credit card company that you will not be paying your credit card debt, they can sue you for payment if they choose. The chances of this happening are not very likely.

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It is easier for the banks to simply sell your debt to a bill collector who will spend more time and energy coming after you for payment than the bank wants to. Still, it is a good idea to do all you can to not default on any debts, including credit card balances.

What gives credit card companies the right to sue you?

When you have gone 90-120 days or more without making a payment to your credit card company or making some attempt to contact them with a legitimate reason why you have not paid they will assume you are defaulting on your debt. By failing to pay, you have breached your end of the contract with the credit card company saying you agree to pay your balance. The credit card company now has the right to sue you if they choose in order to recover this debt. In most cases, it is unlikely this will happen though.

What is the more common scenario when you default on your credit card debt?

Typically, when you fail to make a payment to your credit card company for a substantial amount of time the bank will report your lack of payment as a charge off to the major credit bureaus, which will drastically hurt your credit score for seven years. The bank will then sell your credit card debt to a bill collector who can and will take more aggressive actions aimed at collecting the money you owe. Bill collectors must only take actions that are allowed by the Fair Debt Collection Practices Act of 1978.

What is the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act was passed in 1978 and was designed to eliminate unfair and often, abusive debt collection practices. The law includes a long list of what debt and credit card collectors are and are not allowed to do when attempting to collect an unpaid debt. Included in this list are also specifics about lawsuits filed by banks and other loan companies such as:

  • A lawsuit filed against a borrower who is unwilling to attempt to pay a debt is fair.
  • The lawsuit must be filed in the borrower’s judicial district in which they live.
  • The company filing the lawsuit must have sent clear and sufficient communication to the borrower regarding the balance and late payments.
  • When the borrower has chosen to obtain an attorney, the company filing the lawsuit should direct their communication to this person.

What is the statute of limitations on lawsuits?

The statute of limitations for credit card debt lawsuits against borrowers differs from state to state. In many states, because it can take several years before a credit card company sues you, you could be faced with a lawsuit many years later for a debt you defaulted on.

What will happen if you are sued by your credit card company?

In most cases, as long as the credit card company can prove you have defaulted despite clear communication from them regarding your balance owed, you will lose the lawsuit. You will be ordered by a judge to pay the credit card balance plus any interest and fees. You may also be ordered to pay court fees and the attorney costs for the credit card company.

What if you do not have enough money to pay the debt?

If you do not have the money in your bank account to pay you will be forced to sell any CDs or mutual funds you might have money invested in. You may be ordered to cash in a pension or annuity. If these are not options for you, it is possible you will have your wages garnished. In some states, it is also possible for the bank to put a lien on your house. Based on this it is a good idea to avoid a lawsuit at all costs. It could cost you a lot more than your original balance.

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