Christian Debt Recovery

Will I Get Sued For Old Credit Card Debt?

Chances are you will not get sued for old credit card debt, the process is long and expensive and most creditors would like to find another solution before initiating a legal claim on the debt. Some of those solutions are payment plans, debt consolidation or debt settlement. The threat of a lawsuit looms when we fail to make our payments on our credit cards, becoming delinquent on our accounts bring about a series of events that could lead to legal action. In most cases if this action can be avoided by coming to terms or entering into an agreement with our creditors to pay our loans back.

As I mentioned before the process of legal action is long and expensive, most creditors would rather find a solution, in some cases state laws protect the consumer from being sued, other things such as the statue of limitations also protect the consumer. Depending on how old the debt is or how much is owed weighs heavily on a creditors decision to follow through with a lawsuit. This does not mean or can be taken as an assertion that you would not be sued. The best thing to do is to let our creditors know that we are having difficulty meeting our monthly responsibilities and working out an arrangement with them.

How old does an account need to be to be sued? Well no one really knows, it is like playing the roulette wheel that is what makes it so unpredictable. I have seen some consumers get sued at three months delinquency, some at six, others two years later and there are others that never get sued and the statue of limitations runs out on the debt. In the end it really depends what type of debt we are talking about and which creditor we are dealing with.

Secured debt has a better chance of going into litigation than does unsecured debt, business debt has a better chance of going into litigation than does personal debt. Anyway you cut it you are walking a fine line if you are carrying old debt. There are many things depending on your state laws that can happen before getting sued, such as wage garnishments, bank accounts being attached to, liens on property, etc… If you are carrying old debt whether it is business or personal, secured or unsecured debt it is always a great idea to seek professional help. There are lawyers or debt management programs waiting to help.

The definition of a charge-off is a debt that has been determined non-collectible by the original creditor, usually after the debtor has become seriously delinquent. Typically charge-offs occur after six months of non-payment. Creditors can still collect on charge-offs because the debt is still valid. Charge-offs may remain on your credit report for up to seven years from the date first reported. A charge-off is “the removal of an account from a credit card issuers books as an asset after it has been delinquent for a period of time, usually 180 days. When an account is charged off, the credit card issuer absorbs the outstanding balance as a loss. A charge-off really is just an accounting entry. The creditor is simply saying that they do not expect to collect the debt and are not willing to claim it as an asset of the company any longer. A charge off does not free you from the debt and in most cases these accounts will be referred to a third party for collection purposes.

Original creditors often sell charge-offs to third parties when they write them off. The third party, often a collection agency, gets to keep any money that they collect. This is the reason work very hard to collect as much as they can. If the first collection agency cannot collect the debt they usually sell it to another collection agency of a junk debt buyer for pennies on the dollar. This is one of the reasons why you must remain calm and negotiate to settle for less than 50% of the full amount owed. So what happens to your credit rating when your card balance is written off? Thirty-five percent of your credit score is based on past payment history. A “charge-off” is about the worst mark that you can get on your credit report. It says you are someone with a history of not paying his/her debts; this will affect your chances of being accepted on future loans.

If you struggle to make your minimum payment, the fear of a write-off will cause the credit card company to raise your interest rate. Based on a borrowers payment history, they can predict when someone is becoming a high risk. When that happens, they will increase the interest rates on the account very quickly. That costs you more money every month and is becoming more common in these difficult financial times. If you do have a charge- off on your record, you might want to consider repaying the debt if you have the money. Negative remarks will stay on your report for up to seven years. You may be able to negotiate a debt settlement deal you pay the debt and the lender changes the status of the account to “Paid as Agreed” or “settled in full” If you do this, make sure that you get the agreement in writing.

About the Author

Dan Delgado has been helping consumers become debt-free since 2000. A former debt arbitrator with one of the nation’s largest debt settlement firms, he is the author of “The Do It Yourself Debt Negotiation Manual”. The manual focuses on clear instructions in do-it-yourself debt negotiation & settlement designed to save thousands on unsecured debt. Personal coaching and follow-up support is included. http://www.pemperandgartle.com

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