Lawsuit Credit Card Debt
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Lawsuit Credit Card Debt
Many people don’t realize it, but it’s possible to be sued for unpaid credit card debt. It’s a common misconception that a credit card company “writing off” unpaid debts means nothing will happen. Unfortunately, this is untrue and if you fall too far behind you’ll face a lawsuit for credit card debt. If this happens, what can you expect?
Understanding How the Process Works
If you are sued for credit card debt, you’ll receive notice of the lawsuit, and be forced to decide how you want to respond. It’s intimidating and scary, but it’s fairly cut and dry, at least in terms of legal proceedings.
Behind the scenes, though, there’s a lot going on that consumers don’t always see regarding debt.
In most cases, the entity that files the lawsuit for credit card debt against you won’t be the original lender. Once an account is more than 180 days past due, the original lender sells it to a debt buyer for less than the total amount. Debt buyers, which can also be law firms, purchase debt for pennies on the dollar from the original lender and work full-time to collect on the debts to make a profit from their investment.
So let’s say you owe Bank ABC $10,000 on a credit card. The debt buyer purchases that debt for $2000. Bank ABC gets a little of what they are owed instead of losing it all and the debt buyer now has a $2000 investment it needs to make a profit on. After some collection efforts and notifications, it files a lawsuit against you for the entire amount.
The goal of the debt buyer isn’t necessarily to take battle you in court for the entire $10,000. Instead, it’s hoping one of two things occurs: you agree to a full settlement for as close to $10,000 as possible or they get a default judgment that grants them access to your bank account.
And there’s one final outcome the debt buyer is really hoping for: you ignore the notification of the lawsuit and they receive a default judgment, granting them access to your bank account and other assets. This means they have the legal authority to pull money directly from your accounts and place liens on your property. They are going to make a huge profit off their original $2000 investment because they have control of your money and what you do with it for up to 10 years or more.
How to Handle a Lawsuit for Credit Card Debt
If you’re like most people, your head is likely spinning at this point. Missing a few credit card payments could result in loss of control of your bank accounts and not being able to sell your home?
It’s scary but it’s true.
The absolute worst thing you can do is ignore a notification of a credit card lawsuit. It’s guaranteeing your situation will get much worse and it ensures you’ll be left with very few options.
The best thing you can do if you face a lawsuit for credit card debt is to deal with the problem and retain an attorney.
The best thing to realize is that there’s no reason to panic. A lawsuit means you’re facing serious consequences, but you still have time to resolve the situation.
First, review the paperwork you receive regarding the lawsuit. It should include all of the information you need to know about the debt, as well as the contact information for the law firm representing the plaintiff. Also note how much time you have to respond to the lawsuit. This is an important deadline you don’t want to miss.
You should consult with a debt lawsuit law firm if you get notice of a lawsuit.
For more information or to speak to someone about a lawsuit related to credit card debt, contact 1.800.220.4318.