 Avoiding
a lawsuit over credit card debt
|  Dear
Bankruptcy Adviser,
Can a credit card company really take me to court
over a credit card? I have a credit card with a $1,700 limit and I'm a full-time
student who can't afford much, so would they still be able to take me to court?
What would happen if I just paid back what I could when I could; almost like a
monthly payment? -- Angela
 Dear
Angela,
They can take you to court, but they might not. When
creditors review your account, they look for many things when deciding whether
or not to sue: - How far have you fallen behind? Creditors do not sue
you for being one month late because that would be a complete waste of money.
However, if you have fallen behind more than 60 days, then very likely your account
has been reviewed by the collections department.
- Is there a co-signer
on the account? If so, it is not less likely you will be sued, but the creditor
will begin to contact the co-signer immediately.
- How long have you been
at your job? The longer you have been at your job, the less likely are you to
simply quit and find new employment -- and the better a candidate you are for
wage garnishment.
- Have you lived in the same location for a number of years, and do you
have an active phone number? If so, you're not likely to disappear. Amazingly,
some people would rather quit their jobs, change their phone numbers, relocate
and live a cash-based life rather than deal with creditors or file bankruptcy.
For more information on this technique, ask a neighborhood thief.
- Are
you under 40 years old? Unless the creditor has been notified that you are permanently
disabled, then it knows you are going to work again. The collection agency would
rather sue you, get the judgment and wait for you to start working to collect
the money.
So, let's suppose the creditor (the bank to whom you owe
the $1,700) makes the decision not to sue you. That's not the end of the story.
The creditor could sell the debt at a discount to a collection agency that might
be willing to wait until you get out of school. At that time, the debt will have
doubled, and the collection agency will be entitled to collect the full amount.
The collection agency may also sue and impose a wage garnishment or bank levy,
depending on the laws in your state. Let's avoid the worst-case scenarios
and focus on what you can do now: - If possible, roll your credit card
debt into student loans, i.e., take out additional loans to cover the debt. This
way you'll have only one payment to make at a lower rate.
- If not, make
the minimum payment.
- If you can't do that, consider taking on a little
extra work. Most schools have tons of available part-time work that might not
only help you make your minimum payment, but give you a little spending cash on
top.
Justin Harelik is a practicing bankruptcy lawyer
in the Los Angeles office of Price Law Group. To ask a question of the Bankruptcy
Adviser go to the "Ask the Experts"
page, and select "bankruptcy" as the topic. |
