Can Credit Card Companies Sue Consumers?

Can Credit Card Companies Sue?

If you're wondering "can credit card companies sue?" the answer is absolutely! And many times they do. I often see clients' credit reports with judgments from credit card companies like Capital One Bank or Citi Bank Visa.

It's no secret that if you're late on your payments, eventually your credit card company will pursue debt collection practices including the possibility of suing you in court. The typical scenario is you get behind 30, 60, and ultimately 180 days late and eventually you're notified that your credit card account has been "charged off".

Can Credit Card Companies Sue after a Charge Off?

Many consumers mistakenly believe that once the credit card debt is charged off that they no longer owe the debt. But that is not the case. The charge off is simply an accounting measure. The debt is still owed and very much collectable.

Oftentimes your credit card company may then decide to either hire a debt collection agency to pursue debt collection practices to get you to pay or they may hire a debt collection law firm to pursue the matter on their behalf.

Can Credit Card Companies Sue and Garnish my Wages?

If it's sent to a debt collection law firm, usually they are preparing to file a law suit against you to attempt to get a judgment and then possibly proceed to garnish your wages and/or bank account depending upon your state garnishment laws. Obviously, you should immediately contact an attorney to discuss your options if this should happen to you.

Can Credit Card Companies Sue and Still Settle the Credit Card Debt?

However, even if you are served with papers, you should know that you can still negotiate a debt settlement with your credit card company's attorneys prior to actually going to court. Even if the matter does eventually go to court there could still be hope. You may still be able to negotiate a debt settlement after judgment. Sometimes this can even work to your advantage.

Can Credit Card Companies Sue after Enactment of the Credit Card Act of 2009?

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the Credit Card Act) was signed into law by President Obama on May 22, 2009. The law was designed to put an end to many of the unfair credit card practices committed by credit card companies.

Here's just a few of your credit rights under the Credit Card Act that you should know about...

  • Credit card companies cannot charge you an over-limit fee unless you consent to allowing over-limit transactions prior to the fees being charged. If you agree to accept over-limit transactions, only one over-limit fee per billing cycle is permitted.
  • Card companies may not charge additional fees for accepting payments by mail, phone or online - however, they can charge a fee to expedite a payment.
  • If your due date falls on a weekend or holiday when payments are not accepted, your credit card company cannot charge you a late fee if your payment arrives the next business day. In addition, payments made at a local office or branch must be credited the same day.
  • "Fee harvester" or sub-prime credit card non-penalty fees cannot exceed more than 25% of the credit limit when you open the account.
  • Your credit card company cannot charge a fee of more than $25 unless you were late with a payment in the last six months (in which case you may be charged up to $35); or the credit card company proves that the costs incurred as a result of your late payments justify a higher fee.
  • Credit card companies cannot charge you a late fee greater than your minimum payment. As of August 22, 2010 credit card companies cannot charge you an inactivity fee for not using your card, including fees for not charging a certain amount each month.
  • Also, as of August 22, 2010 your credit card statements must include a minimum payment disclosure that explains how long it will take you to pay off your existing balance as well as the total cost in interest if you only pay the minimum amount due each month.
  • Additionally, your statement must include the monthly payment required, and interest cost, to pay off the existing balance in 3 years. Your credit card company must provide easy online access to the cardholder agreement for your account.
  • Finally, all credit card companies are required to submit card holder agreements to the Federal Reserve, which will act as the central repository. You can locate a copy of your credit card agreement using the Federal Reserve Consumer Credit Card Agreement Search tool.
  • So if your credit card company has violated any of your credit rights under the Credit Card Act of 2009 you may be able to better defend yourself in court should your credit card company sue you.


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