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Credit Card Debt Relief

If you’re one of the millions of Americans who have fallen behind on your credit card payments, it’s important to understand how this debt can impact you and when it makes sense to hire a credit card debt attorney.

Unpaid credit card debt can ruin your credit score and lead to harassing calls from collectors. If you ignore those calls, you could eventually be sued by the credit card company and even have your wages garnished.

This outcome is more common than you might think. An investigative report by ProPublica found that 4 million Americans had their wages garnished over consumer debt in 2013, and Black communities were hit especially hard by debt collection lawsuits.

The good news is that credit card debt is often the easiest type of debt to resolve. That’s because credit card companies have less rights than other creditors, such as the IRS and lenders that issue student loans and secured debt (like auto or home loans).

However, this does not mean that you should ignore collectors.

Prioritize Which Debts to Pay First

But you should prioritize which bills to pay first.

As a rule, you should pay off virtually every other type of debt before paying off a credit card. For example, if you must choose between paying taxes or a credit card, pay the taxes—the government tax collector can be much more ruthless and expensive.

You should also make auto and mortgage payments before paying credit card debt to avoid losing your car or home.

In terms of which credit cards to pay first, it is a good general rule to pay those with the highest interest rates first. This is not always true, though. For example, if paying a higher interest rate credit card will cause you to default on a lower interest rate card—which will then raise your rates—you will need to carefully analyze the situation to determine which card to pay first.

Keep in mind that until a creditor actually takes you to court—and wins—they merely have a claim against you. It’s their word against yours as far as what is owed. Unless they win in court, they cannot garnish your wages or put liens on your home or other property. All they can do is call you, send you mail, and report you to the credit bureaus.

But it bears repeating: This does not mean you should ignore credit card debt. It will not just go away.

Credit Card Debt Is Big Business

To avoid a judgment from being filed against you in court, it helps to understand how credit card lawsuits work.

The debt-buying industry has become big business after taking off in the 1980s and 90s. Today, it is routine for past-due credit card accounts to be sold to buyers looking to make money off your misfortune. These companies buy debt accounts—often by the thousands—at steep discounts with the expectation of turning a profit.

It may seem like a risky investment, but it pays. Consider, for example, that Encore Capital Group Inc. (the parent company of Midland Funding) made $1.19 billion off this type of debt collection in 2017 alone.

Soon after a debt buyer purchases your credit card account, they will begin mailing you letters and calling you demanding payment. Their ultimate goal is to scare you into paying.

Most companies become more aggressive over time. If they’re not successful in getting you to pay, they may sell your account to another agency, and that company might be even more aggressive.

Eventually, a debt buyer may file a lawsuit against you. It’s a myth that these companies would rather avoid court. In fact, ProPublica found that debt buyers are primarily responsible for the rise in lawsuits since the 1990s.

But just because they file a suit does not necessarily mean they will win.

Why It’s Worth Fighting Credit Card Lawsuits

Don’t assume it’s hopeless and that you don’t have a case against a debt collector who is harassing you.

When a credit card company or collector sues you, it simply means they are claiming that you borrowed money, that you failed to pay, and that the balance is what they claim it to be.

But they must be able to prove you are legally obligated to pay.

If you do nothing, the court will assume that you owe the debt and make you pay. But if you defend the case, you force the company’s lawyers to prove each claim they have made against you.

These companies rely on people taking no action—their whole business model is built on the premise that most of these lawsuits will default and that they will get a judgment without a fight. That’s how they turn a profit.

When you defend the case, you force them to prove that you are, in fact, legally responsible for the debt.

Litigators in these cases are usually not very experienced, and since many of these firms file hundreds or even thousands of lawsuits a month, they typically use large secretarial and paralegal staff. They often don’t have the attorney resources to deal with the number of cases they take on.

Which means you may have a decent chance of winning and getting the company off your back.

If the debt is small enough, they may simply dismiss it early in the process. But even if the firm decides to push forward with the case, they often become overwhelmed with paperwork and meeting deadlines, which could work in your favor.

One thing is certain: You must respond to the lawsuit. If you ignore it, the court will likely decide in the debt collector’s favor.

In which case, the consequences for you could include wage garnishment, liens on your property, funds taken from your bank accounts, and even being forced to sell other assets, like your car, to pay off the debt. Worse, your judgment may continue to accrue interest until the balance is paid off.

Common Defenses to Credit Card Lawsuits

A credit card debt lawyer may be able to help you avoid this fate.
If your credit card company files a lawsuit against you, here are some common defenses to credit card lawsuits.

The statute of limitations has passed

Creditors get a limited amount of time to sue you for unpaid debt. This is called the statute of limitations. In California, the statute of limitations is 4 years for unsecured debt (which includes credit card debt). Collectors cannot attempt to collect debts that are more than four years old. If the statute of limitations has passed, you must provide the court with supporting evidence to get the case dismissed. A credit card debt attorney can guide you through this process and improve your chances of winning.

The party suing you has lack of standing

A creditor can only sue you if it can prove it has a relationship to you. If your credit card company sold your debt to a collector, it means the collector is not the original creditor. You may be able to assert lack of standing if the collector can’t prove with documentation that it purchased your account.

You’ve received a discharge in bankruptcy

If you filed for bankruptcy and properly listed your credit card debt in your schedules, you are not responsible to pay the (discharged) debt. A credit card law firm can help you mount a defense if a credit card company or collector is coming after you for discharged debt.

You are the victim of mistaken identity

Because credit card debt is often sold, debt collectors sometimes sue the wrong person. If you have a common name and have been confused with someone else who actually owes the debt, you can assert the defense of mistaken identity. An attorney can help you force the debt collector to produce the original documents, so you can prove you’re not the actual debtor.

These are just some of the defenses you may be able to raise in court. Even if you don’t think you have a defense, it’s worth consulting with an experienced attorney. Our credit card law firm can help you understand what you’re facing and your best course of action.

Our credit card lawyer can also guide you on what to say and what not to say to avoid hurting your case. If you decide to hire us to represent you, we will deal with all communication to and from the creditor or debt collector.

Credit Card Relief Questions

If you’re delinquent on your credit card payments, the credit card company can sue you to recover the money, as long as you signed an agreement either electronically or in writing when you originally obtained the credit card (any legitimate company requires you to sign such an agreement).

If your credit card company sold your debt to a collector, that company becomes the legal owner of the debt. The collector has most of the same rights as the original creditor and may be able to sue you. Attorneys representing debt collection agencies usually sue in state court. The attorney will likely give you the opportunity to settle the debt to avoid a lawsuit. If you are being sued for credit card debt, our credit card debt attorney can counsel you on your best course of action.

What is the statute of limitations on credit card debt in California?

In California, the statute of limitations is 4 years for unsecured debt (which includes credit card debt). Collectors cannot attempt to collect debts that are more than 4 years old. If the statute of limitations has passed, you must provide the court with supporting evidence to get the case dismissed.

If you have excessive credit card debt, both Chapter 7 and Chapter 13 bankruptcy can wipe it out, with some exceptions. Some types of debt, including child support and certain types of tax debt are non-dischargeable, meaning they cannot be wiped out. The Law Offices of Kevin Simon can help you understand how bankruptcy works and whether it may be the right option for you.

There is no sub-specialty of law that specifically deals with credit card debt, but experience in this area matters. Look for a credit debt attorney who thoroughly understands the laws around credit card debt in California—and one who has fought and won cases for clients. Our credit card lawyer in California has helped numerous clients settle their credit card debt with the best possible outcome.

If you are being sued over credit card debt or you’re worried about being sued by your credit card company, an experienced credit card lawyer—like Kevin T. Simon, ATC—can help you mount a defense or avoid being sued. Even if you don’t think you have a case, an attorney may be aware of strategies that aren’t common knowledge or that apply to you based on your specific circumstances. Even a consultation may provide valuable information.

Credit Card Debt Relief in California Pre-COVID-19

In March 2020, COVID-19 shut down much of the state of California, including law firms and state courts. During the shutdown credit card companies couldn’t send files to collections or file lawsuits against individuals who were behind on their credit card payments. Accounts of individuals who were delinquent on their payments prior to COVID-19 were not being processed by credit card companies since the companies had no ability to collect through the court system.

Unfortunately, the courts are now processing these delinquent accounts, and California has seen a huge rise in lawsuits for credit card debt. Our law office can help you stop the lawsuits, bank levies, garnishments, and liens through bankruptcy (which eliminates credit card debt).

Credit Card Debt Relief in California Post-COVID-19

Once the COVID-19 pandemic hit, credit card companies started working with individuals who fell behind on their credit card obligations after March 2020. In some cases, credit card companies made simple debt settlements with their customers or gave them an extra 3-6 months (forbearance) to make their payments.

Now that people have returned to work, credit card companies are no longer offering these types of settlements. Worse, they are starting to sue individuals for credit card debt. Courts have reopened and credit card collection attorneys are filing thousands of cases a day against California credit card holders, hoping to collect millions of dollars in missed payments. The Law Offices of Kevin Simon can stop these lawsuits and give you peace of mind.

The Law Offices of Kevin T. Simon Can Help You Understand What Happens If You Are Sued

Even if you don’t think you have a defense to the credit card company’s lawsuit, you should consult with an attorney to help you understand the lawsuit, how you might be able to fight it, and what could happen if you do nothing.

If you do not respond to the suit, the court will most likely enter a judgment against you for the amount the creditor claims you owe. In other words, they will force you to pay.

Courts routinely order debtors to pay accrued interest plus court fees, which can exceed the original amount owed. They may also allow for garnishment of your wages, which is when they tell your bank to turn over funds from your account. They could even put a lien on your home. We will help you understand what might happen in your situation and come up with a plan of action.

Always remember, you have rights, and you have what they want: money. They know that bankruptcy will wipe out credit card debt. If you are feeling overwhelmed, we offer free phone and on-site consultations with Kevin Simon, an experienced Los Angeles bankruptcy attorney. Don’t wait, call us today at (818) 452-1427 and take back control from the collectors.

Attorney Kevin Simon