A Changing of the Debt Lawsuits – Can You Be Sued for Credit Card Debt?

A few years ago, collection agencies trying to collect on money owed would often threaten lawsuits and further action if you didn’t come up with the money to pay back debts. Many times these threats were only just that – threats. Not many wanted to waste the money or the effort back then to follow through with legal action for unpaid balances. Lawsuits after all are pricey and time intensive so many debt collectors and creditors just kept trying to actively collect on a debt for a year or so but eventually ended up writing off the loss.

However, times have changed quickly. There is so much change going on with the economics of the nation as well as in the credit card industry that the tradition of more passive collection efforts are becoming a thing of the past. More and more companies are taking further legal action and more consumers are finding themselves on the wrong side of a lawsuit for unpaid debts. Credit card companies are hurting bad due to the inability of so many account holders to pay their bills in full or even on time. They can no longer afford to just let debt go and have become more serious about taking legal action.

So what else happens?

When you are the defendant in a credit card lawsuit, chances are good that you will get a judgment against you, provided the balances you owe can be proven. If a judgment is made against you, you will need to find a way to make good on the judgment. In many cases, the judgment will call for a garnishment of your wages until the debt is settled in full. Since your wage garnishment makes it known to your employers that you have debt issues, it is in your best interest to avoid letting your debts get too far out of hand.

Dealing with debt is the only way to make it go away. You have several options prior to a lawsuit that may help prevent such legal action. Here is a brief overview of what you can do to help avoid the legal action taken by creditors and debt collection agencies:

Debt Settlement – you can use this option to essentially settle your credit card balances for a smaller percentage than what you owe. The method involves direct negotiation with your creditors which can be done by a third party service or even by yourself. The downside is you will have to be ready with a lump sum payment at the time of negotiation and settlement agreement and your credit score will take a hit. The upside is you can eliminate debt for a smaller percentage than was owed in a much shorter period of time.

Debt Consolidation – using a credit counseling service can help you eliminate debt faster than it would normally take you by consolidating all of your debts into one easier monthly payment, usually dependent on your income. There may be some creditors who will not agree to work with a consolidation plan but for the most part, creditors are happy to get back any amount of money so they are willing to work with you.

Bankruptcy – taking the bankruptcy route is certainly not the recommended avenue to travel unless you are faced with no other option. Bankruptcy will ruin your credit report for a long 10 years so exploring your options is a better idea.

What it comes down to is there is no escape from your debts. You must face them head on and then work on getting your credit and financial management skills back up to par to truly be debt-free and worry-free about money.