Few people ever mean to fall behind on their credit card payments. Unfortunately, job loss, reduction of income or a series of unexpected financial drains can leave you with a mountain of unpaid bills and a constant barrage of phone calls from intimidating creditors. When it comes to deciding whether to pay the mortgage, utility bill and putting food on the table for hungry children and paying that credit card bill, most people opt to put that credit card payment off. After a few months of non payment, and the account getting passed to department to department and then eventually a collection agency, you may get notification in the mail that you are now getting sued by the credit card company. This is a frightening prospect, as the award of a judgment against you can result in wage garnishment, lien against your home, and a freezing of bank accounts and other assets. This article will offer several tips and suggestions on how to avoid a credit card lawsuit.
Be Honest. Not answering the phone and facing the music head on is the worst thing you can do. Credit card companies view this avoidance as an unwillingness to pay. This spurs them on to the lawsuit route even faster. Be honest about your situation to the credit card representative and try to have a clear plan in place as to when you can resume payments. The credit card company may be able to suspend your payments for a certain length of time or reduce your minimum payment temporarily so that you can at least pay something towards your mounting balance.
Try To Work Out A Balance Pay Off. After examining your financial situation closely, you may be able to reach a settlement with your credit card company for less than what you owe. This will certainly take it’s toll on your credit score, but several months or even years of non payment has already done it’s damage. Be sure to get the settlement terms in writing, and then keep copies of any canceled checks or bank statement showing the withdrawal for the payment.
Don’t Send Any Amount You Can Spare To Stave Off A Lawsuit. Many people make the mistake of simply sending in an amount far less than what the company is requiring in hopes of avoiding the case going to court. Either the bank or collection agency will return the payment as insufficient, or they will take the money and still move forward with the lawsuit. Have at least a verbal agreement with the representative, and send in the agreed upon amount.
Attempt To Work Out An Agreement With The Lawyer Once Your Receive The Legal Papers. If you have been unsuccessful in working out an agreement with either the credit card company or the collection agency, the next step may be for the bank to authorize moving forward with the lawsuit. All hope is still not lost. Once you receive the certified papers stating that you are indeed being taken to court over your unpaid credit card bill, call the lawyer representing the bank in a timely fashion. You often only have twenty or thirty days to still work out a settlement. Be sure to offer a reasonable amount in regards to the outstanding balance, and try to pay off the amount owed in as few installments as possible. Law firms representing banks in credit card lawsuits are far more agreeable to accepting a payment plan in lieu of going to court if the offer is fair and reasonable and will be settled in a timely manner.