Debt Collection Problems

Debt Collection Laws

Credit Card Collections & Other Unsecured Debts

One form of debt that is typically sought after by debt collectors is credit card debt.  Credit cards are typically unsecured debts, meaning that there was no collateral such as a home or car put up for the use of the credit.  If a consumer defaults on one of these debts, creditors tend to hire debt collection agencies and law firms to collect.  A consumer who allows this type of debt to go into default should expect a campaign of calls from a debt collector. 

Lawsuits are filed to collect these debts:    However, the creditor may have the right to file a lawsuit against the consumer to force payment of the debt through a judgment.  If the statute of limitations has not run on the creditor (meaning they still have time under the law to sue) then the creditor has a lawyer (who is also deemed a debt collector) file the lawsuit.  The lawsuit must be served upon the debtor according to the service of process rules of the state in which the consumer resides.  Then, the consumer can defend the lawsuit by asserting various defenses such as fraud in the creation of the account, or that the amount sought after is incorrect or has been paid, to name just a few.  If the case is not properly defended, then the creditor will obtain a judgment in its favor.  When the creditor has a judgment, it may seek involuntary means to force payment such as wage garnishment, asset attachment or lien on property. 

Interest can continue to accrue: Credit card and unsecured debts typically have agreements with consumers that state that any unpaid balance will continue to accrue interest until such time as it is paid in full.   That is the reason why many consumers see a collector pursuing far more money than the credit limit was on the account. 

Credit card collectors can be aggressive and there have been countless reports of Fair Debt Collection Practices Act violations in this area.  Reports have included anywhere from harassment to attempting to collect more money than what was actually owed.  If your rights were violated by a credit card collector - click for free case review