As job losses mount and more Americans find themselves overextended on debt, credit card companies are becoming more aggressive with their collection practices. Unfortunately, some of creditors are not playing fair. As we have discussed previously on this blog, credit card companies are using the legal system more now than ever to collect debt. But many credit card companies are failing to properly notify debtors of lawsuits and many debtors are finding their bank accounts seized having never received notice that they were being sued.
An article in the New York Times illustrates the fallout of the phenomenon:
"Part of the problem is the business model of these debt collection lawsuits," Ms. Coffey said. Creditors often have bought the loans from another financial company, she said, and then hired companies that specialize in collections to notify people of lawsuits. The payment for delivering notice of a lawsuit may be just $5 for each successful assignment, Ms. Coffey said, creating an incentive to engage in "sewer service," where the delivery person simply tosses the court notice in the sewer and claims that the defendant was notified.
Maryann Dorrian, one of the people interviewed by investigators in Mr. Cuomo's office, said she had never learned of legal proceedings against her to collect $2,000 until she had tried to withdraw money from an A.T.M. last April. Her account balance had dropped below zero because the full amount of the debt was withdrawn, she said.
If you have a credit card debt that has been outstanding for an extended period of time, you must address the issue. Bankruptcy is an option for discharging defaulted credit card debt that you are unable to repay. You can also choose Chapter 13 Bankruptcy to repay the debt; but whatever you do, do not allow a lawsuit to progress against you for outstanding credit card debt. If you ignore a lawsuit against you by a creditor, they WILL win a default judgment and seize whatever assets they can. Although bankruptcy can stop a lawsuit or judgment won by a credit card company, if the creditor seizes your bank account assets before you filing bankruptcy that money seized is GONE. If you suspect that a credit card company is filing a lawsuit against you, do not delay contact a bankruptcy attorney today.