| In the current credit crisis, banks find more and | | | | a suit has been filed. When this is the case, the |
| more of their customers unable to pay. Recently, | | | | plaintiff, or collector, will win the suit by default. |
| more and more banks and credit issuers are | | | | This means that the plaintiff does not have to |
| selling delinquent accounts to third-party debt | | | | prove that you owe the money, how much you |
| purchasers. As a result of these sales, the | | | | owe or even show up to court at all. This makes |
| number of credit-card lawsuits has increased | | | | the cost of the lawsuit practically nothing for the |
| substantially. | | | | company. These companies tend to rely on the |
| To give you an idea of how much debt credit | | | | inaction of the consumer because it makes |
| issuers are selling these days: In 1991, $2 billion of | | | | launching these suits much less expensive. |
| consumer debt was sold to third-party | | | | If the company wins by default, what can they |
| purchasers; in 2006, it was $110 billion. These | | | | do? They can put liens on your nonexempt |
| parties purchase the debt for less than it is worth | | | | property or garnish your bank accounts to settle |
| because the credit company wants to get some | | | | the debt (varies by state). |
| of the money back. Then, the purchaser | | | | So, responding to the suit is very important. If |
| attempts to collect what it can, using the | | | | this is not done, the consumer effectively forfeits |
| resources it has. Usually, a lawsuit is the last | | | | his/her right to a defense. There are several |
| effort used to collect a debt. | | | | defenses that can be used in credit-card lawsuits. |
| However, while the number of lawsuits may have | | | | A consumer faced with one should contact a |
| increased, the chances of a consumer defending | | | | collection attorney to decide which one(s) best |
| and actually winning these cases are pretty good. | | | | apply. |
| If a debt purchaser files a credit lawsuit, it's very | | | | When the suit is brought by a third-party |
| likely it does not actually possess the original | | | | purchaser, the most common defenses are the |
| contract or the even the authority to file the | | | | statute of limitations and mistaken identity. No one |
| lawsuit in the first place. | | | | can sue for debt after 4 years (varies by state) |
| Usually, these third-party purchasers buy a large | | | | from the default date, not the last payment or |
| portfolio of debt contracts and, more often than | | | | other date the purchaser may try to use. Since |
| not, do not receive the information needed to | | | | these purchasers have very incomplete |
| launch a successful suit against a consumer. | | | | information, mistaken identity is not uncommon. |
| However, these consumer advantages won't be | | | | In short, open all the mail so you don't miss any |
| of any use if the consumer does not respond to | | | | suit notices. Take the notice seriously by getting |
| the notice that a lawsuit has been filed or show | | | | an attorney and responding to it. Given the |
| up for the court date. Too frequently, consumers | | | | possible consequences, you can't afford not to |
| are intimidated or simply disregard the notice that | | | | act. |