When you go past due
on a credit card, the worst threat a creditor can make is that they will sue
you.
If the creditor
won’t work with you then there’s a good chance that lawsuit will show up at
your doorstep one day.
Now you’ve got a
real problem: instead of just getting collection calls and letters, you’re at
risk of a judgment against you.
What do you do now?
Is it too late to settle the credit card debt and make it go away?
If you’re organized
and proactive, you can still settle the debt and avoid the judgment. Here are
our best tips for making it happen.
Set Your Timer
You’ve got only a
certain amount of time to file an Answer to the lawsuit. Miss that window of
opportunity and the creditor will file for a default judgment.
The default judgment
allows the creditor to start a wage garnishment and freeze your bank account.
Once the judgment is in place, you’ve got not leverage to negotiate the debt.
Best to set your
clock and keep a close watch on it. Every minute counts.
Assess Your
Liability
Take a look at the
lawsuit papers and take careful notes. Is the company suing you the one you
borrowed money from? Does the amount of money they say you owe match up with
your records?
These are a few of
the questions you need to ask yourself as you try to figure out whether you
have a good defense to the case.
Remember it’s no
defense to just say that you can’t pay the debt – that’s a question of ability,
not liability.
By reviewing the
Complaint you can put together a list of defense that may be helpful when you
call to negotiate the debt.
Review Your
Financial Situation
You need to know
what the creditor can take from you if they get a judgment against you. For
example, they can’t take your home if you rent. And they can’t freeze a bank
account if all you get is Social Security income.
If you’re working
then you should calculate how much they can take in a wage garnishment. If that
amount won’t make too much of a dent in your ability to live your life then you
might not care about the judgment.
If the judgment
would do too much damage to your wallet then you will need to figure out a way
to offer a better deal to the creditor.
Make A Realistic
Offer
In order for a
creditor to accept a settlement, you’ve got to offer more than they’d get with
a judgment. If you offer less, or make it more difficult for the creditor to
get the settlement money, then they’ll deny the offer.
To put together a
realistic settlement offer, look to everything you’ve got. Check bank balances,
look around for things you may be able to sell, and decide how much money you
can give for a settlement.
Your settlement
offer can take the form of a lump sum or monthly installments, depending on the
creditor. Some will take only a lump sum settlement, others will let you pay it
out over time.
One thing’s for
sure, though – cash is king. Offering a lump sum settlement will always get you
a better deal than an installment plan.
Prepare To Defend
The Lawsuit
Sometimes, settling
a credit card lawsuit before filing the Answer just doesn’t happen. That
doesn’t mean it won’t ever settle, though – it just means that the timing isn’t
right.
Most creditors will
give you a much better deal if you defend the lawsuit. If you defend the
lawsuit, the creditor knows you’re serious.
When you fight the
lawsuit, the creditor also starts to get worried about losing the case. The
judge could decide that they don’t have enough proof to win, or that something
else is wrong with their case. If that happens, you win and they get nothing.
No matter what you
decide to do, there are always opportunities for you to settle a credit card
debt.
Understanding the
best time to enter into a settlement isn’t easy. If you take the time to map
out a strategy then you stand a better chance of success.
