While debt collectors can no longer have you jailed or threaten to have you arrested for not paying your debts, there are a few instances in which you can be incarcerated with debt as the underlying cause. For example, a debt collector can sue you and, if you fail to comply with court orders, you could get jail time.
If you have credit card debt that the creditor claims you did not pay, you may be facing issues with debt collectors or even a lawsuit. The steps below give an overview of the typical steps involved in credit card debt lawsuits.
If you do not pay your credit card bill, the credit card company may charge late fees and interest. Your credit score may also be negatively affected. If you continue to not pay, the credit card company may take legal action to collect the debt, such as hiring a collection agency or suing you.
If you don't pay your credit card bill, you'll have to pay late fees, increased interest charges, and it can hurt your credit score. If you continue to miss payments, your card could be frozen, your debt could be sold to a collection agency, and your debt collector could also sue you.
In general, a credit card company can sue you for non-payment once your account becomes severely delinquent, typically after 90 to 180 days of missed payments.
This time frame varies by state and type of debt but typically ranges from three to six years for credit card debt. So, by the seven-year mark, most creditors will be unable to sue you over your unpaid credit card debt.
You Can Be Sued for Credit Card Debt
You can't be sent to jail for unpaid credit card bills, but you can be sued. When you fall behind on a credit card bill, your creditor or the collection agency may decide to take legal action to get the money back. If this happens, you'll be served with legal papers.
Some states do not allow a merchant to refuse cash, however a merchant may not be able to accept a credit card for various reasons including a technical issue, the card being declined, suspected fraud as in someone trying to use a stolen credit card or a legitimate credit card without permission by the cardholder.
Though it's not recommended, you can stop paying your credit card bill and wait for the issuing company to eventually “charge off” your account. A charge-off is when a creditor effectively gives up on trying to collect the funds you owe them and instead writes off this debt as a loss.
If you own a home, and have fallen behind on your credit cards or other unsecured debts you may be worried about what these creditors can do to collect on the debt. In many states, including California, unsecured creditors can become secured creditors and place a lien on your home.
Old (Time-Barred) Debts
In California, there is generally a four-year limit for filing a lawsuit to collect a debt based on a written agreement.
Most negative items should automatically fall off your credit reports seven years from the date of your first missed payment, at which point your credit score may start rising. But if you are otherwise using credit responsibly, your score may rebound to its starting point within three months to six years.
They can also freeze your bank accounts, making it impossible to access your funds until you address the debt. In some states, debt collectors may place liens on your property or force the sale of certain assets to satisfy the debt.
Can I call the police if someone owes me money? You can, but they won't do anything about it. Debt collection is a civil matter. You'd need to sue in small claims court.
While credit card companies technically have the ability to pursue your home for unpaid debt, it's rare. A debt collector must go to court and get a judgment before it can place a lien on your home. There are limits and exemptions to how much of your home's equity a debt collector can claim.
No, debt collectors cannot have you arrested for unpaid credit card debt. However, if you are sued and don't comply with a court order, you can be arrested. You can manage your credit card debt by using debt consolidation methods like a balance transfer credit card or debt consolidation loan.
As a result of the consequences of credit card defaulter, you will have to pay high interest charges on your outstanding balance, your credit card will be blocked, you may be blacklisted from taking any other credits in the future. Moreover, legal actions may also be taken against you.
Your account will 'default' if you miss two or three payments. This means you have broken the terms of the agreement. They can then take further action to collect what you owe. Such as using debt collectors.
Walking away from your debt, also known as defaulting, could seem like your best option if you're struggling to keep up with bills. However, walking away from debt won't solve all of your problems. Your lender can still try to sue you for the remaining amount or sell the loan to a collection agency.
You will receive a court summons, and failure to respond can result in a default judgment against you. If the court rules in favor of the creditor, they will issue a judgment that legally confirms the debt you owe. With this judgment, creditors gain additional enforcement powers.
The short answer is yes, credit card companies have the legal right to sell delinquent accounts to third-party debt buyers. This practice is explicitly permitted under federal law and regulated by the Fair Debt Collection Practices Act (FDCPA) and other consumer protection statutes.
You Lose: If the credit card or debt collection company wins, it will ask the judge for authority to collect its money. Your wages could be garnished. Liens could be placed on your property or forced into a sale.
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
More frequently than most consumers probably realize. While precise statistics are difficult to come by, legal experts estimate that several million debt collection lawsuits get filed across the United States every single year.