Credit Card Defense

Millions of Americans are grappling with debt accrued since the Great Recession.

Credit card debt is not necessarily a bad thing, assuming borrowers can keep pace with payments. But a few missed payments can quickly snowball into financial disaster.

Miami credit card debt lawyers at Jacobs Keeley are experienced in negotiating reasonable payments plans and settlements on behalf of struggling borrowers. Early intervention yields the best results, but borrowers who are in deep benefit greatly from having a lawyer intercede.

Those who find themselves overwhelmed by credit card debt should know they aren’t alone. On average, U.S. households owe more than $15,600 in credit card debt. That amounts to more than $880 billion nationwide.

The ADP Research Institute reports a staggering 1 in 10 working Americans between the ages of 35 and 44 have been hit with wage garnishment as a result of defaulting on old debts. In the past, much of this was attributed to non-payment of child support. But today, the majority is linked to falling behind on old debts – primarily medical bills, student loans and credit cards.

Wage garnishment is just one consequence of unpaid credit card debt. It’s also likely a borrower’s credit score will take a hit, which affects one’s buying power, available interest rates and even employment prospects.

Ignoring the problem will not make it go away. In fact, it’s likely to become worse. Addressing it head-on with the help of a veteran debt defense lawyer can minimize your losses and offer peace of mind.

Debt Collection Litigation

When credit card payments lapse beyond 180 days, the account is typically closed and forwarded to a third-party collections agency. This is when the headaches truly begin.

Borrowers can expect to be bombarded with phone calls and letters demanding payment. If you ignore these calls, they may begin contacting relatives and even your boss. These firms are bound by the terms laid forth in the Fair Debt Collection Practices Act, though many have been known to flout the rules.

A delinquent account will be reported to credit bureaus and may remain on your account for up to seven years.

Collection agencies retain the right to sue in certain situations. It is imperative to reach out for the help of an experienced attorney. Failure to do so can result in default judgment against you, which could include not only the original debt, but also hefty penalties and plaintiff attorneys’ fees. Your wages are likely to be garnished and liens could be placed on your property.

An attorney can help guide you through this process, often negotiating a settlement before you ever have to set foot in a courtroom. In some cases involving older debts, the collection action may be time-barred, meaning the statute of limitations has passed. However, if you don’t fight back, this won’t necessarily stop a creditor from obtaining a default judgment.

In Florida, the statute of limitations for collections is five years, per Florida Statute 95.11. However, almost all credit card issuers name which state’s laws should apply to their credit card agreements, which is the home state of the issuer, rather than the borrower. So for example, Wells Fargo and Citi name South Dakota, which has a statute of limitations of six years. On the other hand, Chase, Discover and Bank of America name Delaware, which has a statute of limitations of 3 years.

Borrowers should also be careful of the practice of “re-aging” old debts. This often happens when hounded debtors attempt to mitigate the issue by making a small payment. In doing so, they may unwittingly re-set the statute of limitations, extending the amount of time companies have to collect on that debt.

Beware Debt Settlement Scams

Those overwhelmed with credit card debt are often lured by the slick marketing and big promises of for-profit companies that offer to settle the outstanding balance for a lump sum less than what’s owed.

But the Federal Trade Commission has warned consumers to be extremely cautious in accepting these offers. Some “guarantee” to settle all of your debts for 30 to 60 percent of what you owe. However, this is deceptive because credit card companies are under no obligation to negotiate.

What’s more, some debt settlement firms attempt to collect their own fees before settling any of your debts. This is strictly against the law, per the FTC’s Telemarketing Sales Rule.

Many of these companies also fail to fully explain the risks associated with enrollment in their program. For example, debtors are advised to simply stop paying on the cards and instead put a portion of those payments into an escrow account. But if a settlement isn’t reached, a borrower’s credit score will take a bigger hit. He or she will likely face litigation from the credit card company (or third-party collections agency) and will be no closer to relief than when they started.

Even if a settlement is reached, whatever amount is forgiven could be considered “income” and is therefore taxable. Debt-settlement companies frequently fail to disclose this information.

By choosing an experienced law firm with proven success in debt resolution, you know we will be held accountable not only to state and federal regulators, but also by the Bar Association.

If you're battling debt collection or unfair reporting in Miami or the surrounding areas contact Jacobs Keeley Trial Lawyers for a confidential appointment to discuss your rights.

Call us at (305) 358-7991.

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