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Summary: How to handle credit card debt
Are you sued because of credit card debt or did you open a credit card account and can no longer pay it?
You have a number of defenses. It depends on how the bank handles your account.
Part of it depends on how much debt you have. Frequently, if you have less than $10,000 of credit card debt, the bank will well the debt to a debt buyer. Debt buyers frequently consist of debt collection agencies or even law firms that are debt collection agencies. They work on high volume and depend for their profits on lawsuits that are not answered, a default judgment (meaning a judgment that is obtained because you, the debtor and defendant in the lawsuit, have not bothered to show up in court - after obtaining a default judgment, the judgment creditor garnishes your paycheck or restrains your bank account).
You can tell if the debt buyer is suing you due to the plaintiff’s name: is it Citibank, JPMorgan Chase, Bank of America (then it is the original bank holding the debt) or is it XXX Recovery Service? If it is the latter, you are lucky, because you can easily defend yourself. What debt buyers don’t depend upon is your defending yourself in court. In the Civil Court of the City or the District Court in Long Island. you must request information from the debt buyer so that the debt buyer can prove his case.
Sometimes the Court will help you. If you show up and answer on your own, the court will set up a date where you show up again, taking time off of your regular schedule. That date, when you show up, you can say that you don’t know if the debt is yours, putting the
ball in the debt buyer’s court.
For this reason, the attorney for the debt buyer will attempt to settle with you for less than what is sued for: why? Because the attorney knows that his client, the debt buyer, will have trouble proving that you owe the debt. So don’t admit that the debt is yours.
Settlement is an option, provided you know these facts. Settlement is good for several reasons: one, although you have to pay something on your debt (likely you owed this money), you no longer have to show up in court. Also, you will get a letter from the debt buyer that this debt has been paid, and this information should show up in your credit report soon (if not, you are able to dispute the debt and get it cleared up).
Hiring an experienced, seasoned attorney to help you with this process can get even better results. Attorney services for DC 37 employees (the NYC teachers union) boast that they can get most of the credit card debt buyer cases dismissed because they can claim that identity theft or some other type of fraud is involved. You are far far more likely to succeed on these terms if you hire legal representation.
What if you owe alot of money on a credit card and the original bank is the plaintiff? You will have fewer defenses; if you answer, the bank can show that you are the credit card holder and that the bank sent you its credit card bills at your address. These days, you may be able to settle for a lump sum at 65%.
Remember that the best policy is to be diligent and answer.
What if there is a default judgment against you? Check out my entry concerning default judgments.
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