Laws on Judgments for Credit Card Debts
Unpaid credit card debt can come back to haunt you in the form of a judgment. When you fail to pay money you owe to your credit card company, the company may either sue you or sell the debt to a debt collector that may subsequently sue you. Fortunately, creditors must abide by state and federal consumer protection laws when using court judgments as a debt collection tool.
Other People Are Reading
-
Statute of Limitations
-
Six months after you stop making payment to your credit card company, the clock begins ticking on the statute of limitations. Each state possesses a statute regulating the amount of time a credit card company or debt collector can seek a judgment against you regarding your unpaid credit card debt. State statutes of limitations for debt lawsuits range from two years to ten years, depending on the state.
Federal collection laws prohibit creditors from suing you or threatening to sue you after your state’s statute of limitations has expired. If a lawsuit occurs, however, you can prevent a credit card judgment by using the expired time limit for lawsuits as a legal defense in court.
Proper Notification
-
When a creditor sues you for a credit card debt, he must send you proper notification of the lawsuit. This gives you the opportunity to defend yourself in court. State laws vary concerning what does and does not constitute proper notification. In some states, only a sheriff can deliver a court summons while in others, mailing a court summons to the debtor’s last known address is adequate notification.
Some creditors have been known to intentionally fail to notify debtors of pending lawsuits against them. If you have no knowledge of a lawsuit, you cannot defend yourself in court and the creditor wins a judgment by default. If you suspect you are the victim of improper notification, you can contest the credit card judgment and request that the court overturn its previous ruling.
-
Debt Recovery
-
A judgment grants a credit card company or collection agency additional rights when it comes to recovering your unpaid credit card debt. Such rights include wage garnishment, property liens and bank account seizure. Some states, such as Pennsylvania, place strict limitations on how a creditor can use its credit card judgment to collect. While debt recovery allowances vary by state, some states only permit creditors to garnish wages, bank accounts or place liens on personal property if the debt is a government debt. Creditors who attempt to take these actions when collecting credit card debts would be violating state law.
In addition, a credit card judgment does not give any creditor the right to seize your federal benefits, such as Social Security payments or retirement benefits, or garnish your tax returns. Only the federal government possesses this right.
-
References
Resources
- Photo Credit dollars and credit card image by NatUlrich from Fotolia.com
