Dealing with Credit Card Debt Collectors

by | Jul 15, 2021 | Billsaver, Debt Reduction, Understanding Credit Cards

If you get behind on the payments on your credit card, it is possible their card issuer may take them to court to collect the outstanding balance. Since dealing with collections is so stressful, it is helpful for debtors to understand how the process works so they know how to respond.

It is important to keep in mind that creditors will do everything they can to collect, and debtors do not want to meet their lender in court. Thus, if you are behind on your credit card payments, you want to work it out with your credit card issuer as soon as possible. Avoiding the problem will only make things worse. You will also want to know your rights so you know what your lender legally can and cannot do.

Credit Card Debt Collection and Litigation

If you are not making your minimum payments on time each month, you are breaking your credit card agreement with your lender. You are technically delinquent when you have missed a single payment, but most issuers will not report this delinquency to the major credit bureaus until two consecutive payments have been missed. After the second missed payment, your credit score will likely drop.

After you have been delinquent for 90 to 180 days, your issuer will likely close your account, and the delinquency will be listed on your credit report. At this point, the balance may be charged-off and turned over to a collection agency. If you cannot make your minimum payment now or in the near future, you will want to contact your issuer to try to arrange a payment plan before your account is turned over to a debt collector or collection agency.

The Fair Debt Collections Practices Act gives debt collectors a guideline for contacting debtors. Your debt collector can legally contact you via letters, telephone and email. Dealing with these people can be very stressful.

When you are contacted, call your credit card company before you make a payment to verify that your issuer turned the debt over to collections and the amount that you owe. You may be able to negotiate a settlement with your issuer.

If you cannot reach an agreement with your creditor, the collection agency can sue you. You will receive a summons to appear in court, and it is imperative that you do not ignore this. If you do not show up to court, the plaintiff automatically wins. They will receive a judgment against you, and they can then garnish your wages or seize assets to pay off the debt. The judge may also create a repayment plan. If you are summoned to court, hire a lawyer who specializes in consumer law.

Make sure you ask questions and pay close attention to dates. There is a statute of limitations to sue for credit card debt. If the date has passed, your case can be dismissed. Each state has its own statute of limitations that ranges from three to ten years. The collection agency may still try to collect the debt, but you can ask for the date of your last payment and whether the debt is out-of-date. Until this information is verified, the debt collector cannot collect. However, if you make any payment on the debt, the statute of limitations clock may start over.

Finally, remember that delinquent accounts will remain on your credit report for seven years from the date of your first missed payment.