Having a credit card provides you with a cushion that you can use when you are short of cash or you need funds in an emergency. However, failure to pay back your credit card bills on time can often have dire consequences, and this is one of the biggest issues that most people face. The worst case scenario is if you have maxed out your credit card, you may be faced with a lawsuit.
Can Your Credit Card Company Sue You?
Yes, your credit card company is well within their rights to file a lawsuit against you, if you have been defaulting on your payments and can’t provide the company with any definite timeline for repayment. This often happens to people who have credit cards with very high limits and exhaust them to the fullest, for any reason.
A credit card bill is like a debt that you have taken without any collateral, which is why the company may sue you as a means to recover their debt.
What can You Do to Avoid Being Sued?
Normally, credit card companies take such extreme measures when you are being evasive and not responding positively to their queries. For instance, if you stop taking their calls for a long time, or if a bank representative visits your property and you don’t come to the door, they would be inclined to sue you after a few warnings.
Therefore, the first thing to do is to never miss a call from the bank, and never go into hiding. This will only make things worse for you in the long run. Of course, the best way to avoid a lawsuit is to pay your bills on time and not overuse your credit card, but it can be difficult in some cases, such as paying for your hefty medical bills or an unforeseen occurrence that calls for a large expenditure.
What to Do When You Are Sued?
If you have received a lawsuit notice from the court, the first thing you have to do is to hire a lawyer, who can guide you with the next steps. Even then, make sure you receive every call from the bank and attend their representatives if they visit your home. When you hire a lawyer, they will be able to verify whether the lawsuit is genuine or not.
In most cases, people have been defrauded by scammers who pretend to be bank officials or debt recovery agents. They produce false legal documents and try to intimidate people into paying a settlement amount, which may be much lower than your credit card bill.
However, if everything checks out and the lawsuit is completely legit, then you should talk to your lawyer about negotiating with the bank for an out-of-court settlement. Of course, this would still require you to pay your credit card bill, but they may be able to bring down the monthly installment to a lower amount that you can easily manage, or buy you some more time so you can pay off your dues without any hassle.
An out-of-court settlement will always be in your best interests because normally, lawsuits are filed for much higher amounts than what you owe to the bank. It could be virtually impossible for you to pay the amount needed to settle the lawsuit on its own.
Final Thoughts
As is the case with all credit card and debt related issues, financial literacy is of the utmost importance, and you should also know your rights, so that if the bank tries to use illegal or unethical means to intimidate you, you may be able to fend them off. If you need professional consultation regarding your credit card payment or any dispute, you can get in touch with Dsouza and Strachan Law. We have sufficient experience with Consumer Debt Defense and can provide you with suitable options.