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When Your Credit Card Company Sues

Credit Cards

Personal credit cards are relatively easy to obtain, but credit card debt can get quickly out of control. Just one missed payment can damage your credit. If you are unable to pay your monthly payments, your card company may close your account, declare the debt defaulted, and raise your interest rate (often to 28% or more!). Your creditor or a third party collector can harass you with phone calls at home and at work, and eventually you will be sued for the debt.

If you receive a court summons, don't ignore it! If you fail to file an answer and defend the lawsuit, your creditor will receive a default judgment against you for the full amount of the debt, plus interest and fees. Your wages can be garnished and your bank account could be seized. A civil court judgment will stay on your credit report for at least seven (7) years.

Fortunately, credit card lawsuits are notoriously flawed. A Brooklyn civil court judge recently told the New York Times that "roughly 90 percent of the credit card lawsuits are flawed and can't prove the person owes the debt." Unfortunately, the cost of defending a credit card lawsuit is generally cost-prohibitive. Most people cannot or will not spend $5,000 to contest a $5,000 debt.

Once a lawsuit is filed the creditor has little incentive to negotiate a settlement with you. The creditor has already paid an attorney who has drafted and filed a complaint. With a judgment the creditor can legally force you to pay your debt. At this point there is little hope of paying the debt in installments or settling for "pennies on the dollar."

For those who need it, bankruptcy can stop a credit card lawsuit and discharge the debt forever. The automatic stay provision of the federal Bankruptcy Code immediately stops the state court preceding. Once the debt is discharged at the end of the debtor's case, the lawsuit must be dismissed and cannot be refilled. Bankruptcy prevents future lawsuits to collect discharged debts and will terminate the obligation to pay most court judgments.

Bankruptcy can shield you from lawsuits and end your credit card nightmare! Attorney Eron Epstein can explain your bankruptcy options and discuss the best way to discharge your debts. Call 423-752-3000 for a free consultation.

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Eron Epstein, Bankruptcy Attorney

713 Cherry Street

Chattanooga, TN 37402

Tel: 423-752-3000

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