Bad Debt
Credit card companies have the right to take a customer to court to ask for a judgment demanding payment of a legal debt. A judgment on a consumer credit report severely affects a consumer's ability to get credit in the future and to obtain decent rates on any loans they may get approved. If another party causes the bad debt and the consumer does feel he is legally bound to pay the overdue funds, then a court appearance should be made. Consumers have the right to bring an attorney to court to plead the case or can show up at the appointed court date with proof that the debt is in error. If the collection is due, there is no need for a consumer to show up in court. Absence is a confession of debt, and judgments usually are automatic for creditors, according to Bankrate.
Options
While in court, the judge may ask the debtor how he intends to settle the debt. Judges do not typically allow repayment negotiations to take place in the courtroom, but a judge can ask the creditor to accept a reasonable reduced payment to settle the account. The defendant then has a specified number of days to make that payment or return for second hearing. A defendant may be referred to a debt negotiation counselor. Settling for an agreed upon amount, making arrangements to pay a certain amount on a regular basis and filing bankruptcy are the main options available to a person who receives a judgment. No matter what options a debtor takes, the fact that the credit company had to take the customer to court to collect payment will be recorded on a credit report.
Outcomes
There are a number of outcomes that are possible following a summons by a credit card collector. The judge could allow the credit card collector to garnish the consumer's wages, up to 25 percent, report financial consultants at Bankrate. The creditor may be allowed to place a lien on savings and checking accounts to recoup the funds. If a consumer does not follow the order of the judgment and pay the bill, a second hearing is set. Failure to show up at a second judgment hearing could result in a bench warrant being issued. A warrant allows police to make an arrest. The police may not actively pursue the warrant, but it will show up at some point, such as during a routine traffic stop.
Member Comments