Financial Resource

When you fall behind on payments, the credit card company may or may not sue you depending upon the amount you owe. Credit card companies usually file a lawsuit when you are at least 4 to 6 months past due. To avoid being sued, contact your creditors and negotiate a payment plan you can afford. If your creditors refuse to negotiate with you contact a debt solutions company. They will be able to setup a payment plan with your creditors. A leader in the debt solutions industry is www.debtsolutionsusa.com . Debt Solutions USA is an A+ Rated company and is BBB Approved and Accredited . This does not always stop a lawsuit but the creditor is less likely to sue when a payment plan has been established. Click here for debt help Debt Solutions Guide to Managing Debt

Do credit card companies actually sue debtors?

In most cases, Yes. They then tack on the cost of the lawsuit to your bill. Certain credit card companies are more prone to taking legal action when they feel that debtors are trying to escape their credit card payments. But if the Statute of Limitations on your debt account expires, you cannot be sued for credit card debts. The Statute of Limitations (SOL) varies from one state to another. It can be different for each type of debt account. If your account is past the (SOL) and the collection company is trying to get you to make a payment, Do NOT make any payments. Even a .00 payment can restart the statute time period. Once you are past the SOL the creditor can not sue you for that debt. Legally you no longer owe the money. It will be removed off your credit report 7 years from the last payment or purchase activity on the account.

What happens if you are sued for credit card debts?

If the account is yours, the credit card company in most cases will win the lawsuit and obtain a judgment against you from the court. Through the judgment, the court orders you to pay off credit card bills. The judgment order gives your credit card company the right to seize funds out of your bank account, garnish your wages and a host of other collection actions depending on your state. Some states such as Texas, do not allow wage garnishment unless it is the only way out for a creditor to execute a judgment. States which do not allow garnishment may seize your bank accounts (also joint accounts) and sell off non-exempt property or place a lien on your property. However, such states cannot initiate a forced sale of your primary residence. In community property states like Texas, if you are sued for credit card debts, your creditor can seize joint marital property or place a lien against it even though your spouse may not have her name on the debt account.

Being sued for credit card debts – How do you get out of it?

Here are some options you may want to use when you’re sued over credit card debt.
Use SOL defense: If you’re sued for unpaid credit card bills even after the SOL has expired, send an Expired SOL Notification Letter to the creditor stating that he cannot take a legal action against you because your account is well past the SOL. You will have to show proof of the SOL such as statements with the dates when your account has been in default and when you have been charged-off. Copies of your credit report showing the exact date of default will also serve as proof of the SOL.

Reply to court summons: If the SOL period hasn’t expired and you’re sued for credit card debts, then you would probably receive a court summons, which you need to reply within a certain time period. The duration for replying to a summons varies from state to state. Check the summons or warrant for the reply response time limitation.

Answer a summons or warrant: You need to file a document (known as “Answer”) with the court. In the Answer, you can dispute the allegations brought about by your credit card company. You need to send a copy of the Answer to the attorney representing the creditor. The copy should be sent by Certified Mail with a Return Receipt Request. Never send originals.When you reply to the summons, it prevents your creditor from getting a default judgment from the court. Replying to the summons gives you additional time to negotiate with your creditor and/or file for bankruptcy.

Appear in Court: If you are sued for credit card debts , make sure you show up for your court date. Do not skip it or you will receive a default judgment. Ask the court if they would arrange for a negotiation with your creditors. The judge may order the creditor to offer you an affordable payment plan so as to put the lawsuit on hold. This will give you the opportunity to pay as much as you can and creditors will not be able to continue with the lawsuit in court.

Bankruptcy: If you have other debts, we highly recommend you speak with at least 2 bankruptcy attorneys. The consultations are free. Do not wait to speak with an attorney because you need to find out what your rights and options are. In most states once you obtain a judgment you can not include that judgment into a bankruptcy. So be very careful how you deal with a summons or warrant.

Sued for credit card debts – how does it affect your credit score?
When you’re sued and the creditor receive a judgment order, it stays on your credit report for 7 years from the judgment filing date. This can bring your credit score down by 50-100 points thereby making it difficult for you to qualify for credit. If you do not pay the judgment amount, it can get even worse. Unpaid judgments are renewed for an indefinite period of time even if you do not have the funds to make payments. So, the best way to avoid such legal action is to negotiate a payment plan or settlement with your creditor. You should also check with a bankruptcy attorney in your area to find out what your rights and/or options are.

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