What is a creditor?
A creditor is a person or company who gives you something of value, for example; goods, services, or cash, in return for your promise to pay them back at a later time. A creditor can be a credit card issuer, a bank, your local doctor, or any person or company you owe money to.
The “3 Minute Budget”
50% Needs
30% Wants
20% Savings
What is a secured loan?
A loan is said to be “secured” if it is backed by something of value, we refer to this as collateral. If your debt is secured and you are unable to pay off the debt, your creditor will take the collateral you had to put up as payment. Examples of secured loans are mortgages and car leases. A secured credit card is usually collateralized by a savings account; the credit limit in turn will be based on the value of the collateral you post.
What is an unsecured loan?
A loan is said to be unsecured if you are not required to post any collateral but your promise to pay back, without collateral as a guarantee. Most credit card debt is unsecured.
Prioritize Your Debt
If you are drowning in debt, deciding which debt to pay first is important, and unsecured debt, such as credit cards, are usually the lowest priority. You should make at least the minimum payment if you can, but not at the risk should not risk of your NEEDS like food, housing and medications.
If you owe money to a creditor, what can the creditor do?
If your debt is unsecured, such as a credit card, a creditor may:
- Cease doing any business with you, due to breach of contract.
- Report your outstanding debt to the credit reporting agencies like Experian, Equifax and Transunion. *Most Credit Card Creditors will only report to one of the agencies. Therefore, when checking your credit be sure to get a copy of all three reports.
- File a lawsuit against you to collect the debt and almost always, hand the outstanding debt to an official debt collector to collect upon.
Do Debtors Have Any Rights?
Yes, there are multiple laws both State and Federal, that provide legal rights to Debtors. A Credit Card Debt Collector must comply with a fundamental Federal Law known as the FAIR DEBT COLLECTION PRACTICES ACT or the (“FDCPA”).
What is the FDCPA?
The FDCPA is a law that protects debtors from debt collection harassment and requires a creditor treat a debtor fairly.
What other protections exist within the FDCPA?
The FDCPA gives you the right to dispute your credit card debt. The FDCPA also governs when and how a credit card debt collector may contact you, and what the collector can say to you. There are also rights within the FDCPA that force debt collectors to leave you alone.
How long will it take for a credit card creditor to send my debt to a collection agency?
There is no schedule or rule as to when your credit card debt may be turned over to a debt collector. Generally, credit card issuers, have debt collection departments internally and may keep the debt for a longer period of time on their books. At a certain point the credit card issuer may wish to write off the bad credit card debt and sell it to a credit card debt collection agency.
Can I do anything to prevent the credit card issuer from sending my debt to a collection agency?
Yes, be sure to contact your credit card issuer as soon as you realize you are dealing with financial difficulties and won’t be able to pay your credit card payments. Communication is critical. Explain your expenses such as a mortgage or rent, coupled with food and other life necessities that you have to pay first and thus you don’t have the finances and cash flow available to pay your credit card debt. It never hurts to let them know you will pay when you are financially able to. Be honest, stay calm and be factual. Take notes and get the creditors name and ID number etc… sometimes you may get lucky and the credit card company or bank will understand and not send your credit card debt to a collection agency. Contacting your creditor to explain your situation is especially helpful when there has been a major life changing event in your life such as illness, divorce or a loss of job.
Can my creditor sell my debt to another company?
Yes, the trading or buying and selling of existing bad debt is completely legal and conducted daily in America. In fact, today there is a very likely chance that your creditor will eventually sell your credit card debt to a company that specializes in buying and collecting upon old credit card debts. Such companies are known as (“debt buyers”).
Can a collection agency or debt buyer report your debt to a credit reporting agency?
Yes, a collection agency or a debt buyer can report the bad credit card debt to all or one of the credit reporting agencies. Nonetheless, each reporting agency has a binding legal obligation to report your debt accurately so that your credit report is fair and up to date.
How long can a Debt Buyer and Collector report your credit card debt to the reporting agencies?
A debt buyer or credit card debt collector are entitled to report the credit card debt to the credit reporting agencies for up to a maximum of Seven (7) years. Once your credit cards are delinquent the seven-year clock begins. It makes no difference if the credit card debt is sold multiple times to different debt buyers, the delinquency date remains permanent and the 7 years calculated exactly from delinquency. Take note, the debt buyer or collection agency MUST report the true delinquency date to the credit reporting agencies accurately and honestly. Ask for your free credit report annually or more often and see whether the delinquency date is correct. Some debt buyers and collection agencies mistakenly begin the seven-year clock only after they receive the debt, this is incorrect and violates your legal rights as the debtor. The re-calculating of debt is illegal and referred to in the industry as re-aging debt. Re-aging is absolutely illegal. If you find re-aged debt in your credit report – dispute it.
Will My Creditor Sue Me?
There is no hard and fast rule. Creditors often threaten lawsuits, but sometimes these remain threats and a lawsuit is not always carried out.
What can Prevent a Creditor from Suing Me?
The following is a list of actions you may take or have taken that may prevent you being sued in court:
- If you make voluntary payments, even if the payments are very small.
- You dispute the debt as well as raise a legal defense as to the bad debt.
- If your debt is less than one thousand dollars ($1,000).
Kindly note that many creditors are irrational, and therefore some will sue even over small amounts of money. This does NOT mean you lose the lawsuit immediately. A competent and experienced debt settlement lawyer and debt settlement law firm can assist you with the outstanding debt and a lawsuit if filed against you for the debt.
Can my creditor sue me after I have made a payment arrangement or reached a settlement?
Unless you have a specific agreement with the creditor providing that it will not sue you, your creditor is permitted to sue you despite the presence of an agreement regarding repayment. Once again, an experienced credit card settlement attorney will make certain your settlement agreement and repayment plan do NOT allow the creditor to continue to sue you. Be sure any arrangement is approved by the actual debt holder. Also take notes and get their ID numbers or names. You may also wish to record the conversation. Kindly note, in New York it is allowed and it is legal to record conversations that you initiate and you are not required to tell the creditor you are doing so.
What should You do if the Credit Card debt owner sues you?
Make sure to respond to the Complaint or Lawsuit. There is no specific format for Answering (replying) to a debt lawsuit. However, you must address each allegation made. You can Answer with a denial as simply as writing “denied.”
If something is true you can respond True. Kindly note that it is imperative you Answer and reply to any lawsuit you are named in within the legally permitted time frame. The time frame to Answer will depend on how you received the lawsuit. Were you served in hand personally? Or, did you get a copy of the lawsuit in the mail? Usually if mailed you will have no more than thirty (30) days to Answer. If the lawsuit was served upon you, you will have twenty (20) days. An experienced and specialist debt defense attorney can respond to and block any lawsuit you may have, thereby bringing defenses and being sure to respond to the creditor legally on time.
What is a Statute of Limitations?
A statute of limitations is a set time limit that someone or some entity have to sue you. Different types of cases may have different time limitations to sue. The Statutes of Limitations may vary from State to State, so it is important to know the legal rules for your State. Any Credit Card Debt Relief Law Firm can tell you if the Statute of Limitations has expired.
What is the statute of limitations to file a debt collection lawsuit?
As of April 7, 2022, New York imposed a three (3) year Statute of Limitations on many kinds consumer debts, including credit card debt.
How Long Does a Creditor Have to Collect Upon My Credit Card Debt?
This will depend entirely on whether you are sued and fail to Answer the Lawsuit in time to avoid a Default Judgment being issued to the Creditor. If a credit card deb t buyer or collection agency do obtain a debt judgment against you, the creditor will have up to ten or even twenty (20) years to try collect upon the debt. Often this is carried out via a wage garnishment. Do not allow the Creditor to obtain a judgment. However, even if there is a judgment filed against you, there are still legal mechanisms and methodologies to try vacate or remove the judgment. When it comes to debt and Credit Card Debt in general, there is always a legal solution and ways to protect yourself.
Can a debt collector contact me about a debt that is past the statute of limitations?
Yes. It is legal for a debt collector to contact you about an old debt that is past the statute of limitations. As of April 7, 2022, if you make a payment on a credit card debt that is past the statute of limitations, the creditor cannot restart the statute of limitations on your debt. However, if you wish to assert the Statute of Limitations as a defense be sure not to make any payments however small to the debt buyer or collection agency.
Can a creditor sue me for a debt that is past the statute of limitations?
A debt buyer or collection agency are permitted to sue you even for a credit card debt that has past the Statute of limitations, but in doing so they may be in violation of the FDCPA. Kindly note, if the creditor suing you is a debt buyer, you will use the defense of the Statute of Limitations in your Answer, thereupon the Court will likely dismiss the case in its entirety.
Can Someone go to jail if they fail to pay a Credit Card?
No, in the United States there is no such law. Kindly note that owing money is not a crime. Additionally, you are not alone, according to statistics a majority of people will default on one Credit Card during their lifetime. Debt can affect anyone and you are NOT alone. Let the attorneys at your Credit Card Legal Clinic defend you and your legal rights when faced with a debt collector or debt buyer. Our law firm stands shoulder to shoulder with all our clients. We will defend you zealously and effectively, while making sure you are fully protected.
