Credit Card FAQ

Why Do Credit Card Companies Sue Consumers?

30 October 2011 by CreditCardsCo™

If a credit card holder is behind in the payments, the credit card company lets the collection agency collect the payments. If the credit card holder does not repay the payments then the collection agency may decide to sue the credit card holder. But the process of this legal lawsuit is not simple and has certain terms and conditions.

If the credit card company decides to sue the credit card holder then they must prove that they are entitled to file this lawsuit. They should be able to produce signed documentation and evidence of the account agreement. If they fail to produce the document, then credit card holder can file a complaint against the lawsuit.

Who Will The Credit Card Companies Sue?

The main job of the credit card company is to regain their money back. If the person has lost their job or assets, then the credit card company will not waste their time and effort as there is a lesser chance of regaining the money. The credit card companies will only sue the people who they think have the potential to pay them the money back.

Will Credit Card Companies Assess The Financial Situation Before Sue?

The company will normally asses your financial situation before deciding to sue. The employment status, length of your current job, and whether you own a home are considered while making the decision. The company is more likely to sue if it believes it can collect the money you owe them.

What do the Terms and Conditions Say?

The written documentation of the bank account's terms and conditions should state the consequences of credit card debt. The credit card holder can only be sued if there is a law regarding the credit card debt. The written document stating the terms of the account is normally given at the time of the account opening. Often these terms are changed with time and in that case, the credit card company should update the card holder with the new terms and conditions.

What is the time period after which credit card company can sue?

The time frame plays a role in the decision to sue. A credit card company will not sue the account holders who are just a few months behind their payment schedule. After a period of time the company forwards the account to the collection agency if payments are still due.

What are the prevention measures that can be taken?

Make at least minimum payments on your credit card to avoid the lawsuit, even you are struggling to do so. If you have lost the job, try and take part-time role until you are financially stable. This will help you avoid the lawsuit which can lead to further destruction. Sometimes card holder can settle the matter with the credit card company without going to the court. The credit card company can accept lower payments and can also reduce interest rates.

What to do after company has sues?

The first thing to do is not to panic and never make the mistake of ignoring the court letter. If you do not reply then court will file the judgment against you by default. This can result in confiscation of your property, frozen bank accounts and worst credit report for years to come. So always reply to any lawsuit and answer whether or not you want to dispute the case. This will prevent an automatic judgement and will give time to go for a credit card settlement or any other option.

This article explains in the situations in which a credit card company will sue the consumer. This explains the credit card holder about the terms of the bank account and how to prevent the lawsuit.

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