Dealing with credit card debt is difficult enough already. However, phone calls from collection agencies and creditors greatly add to the stress for many people. Sometimes, those collectors try to use overly aggressive tactics in an attempt to make you pay up. In rare cases, they may even threaten jail for credit card debt. Fortunately for you, there are ways to prevent collectors from adding to your stress.
At O’Bryan Law Offices, we have extensive experience in helping our clients handle aggressive collection tactics. We also handle all manner of bankruptcy cases, including both Chapter 7 bankruptcy and Chapter 13 bankruptcy. If you’re struggling with creditor harassment or financial troubles, contact a qualified Kentucky bankruptcy attorney today. Call our Louisville office at 502-339-0222 to schedule your free consultation.
What Are the Legal Repercussions of Unpaid Debt?
Defaulting on credit cards, loans, or any other regular payment is something everyone should try to avoid, when possible. “Being in the red” on payments for too long can be risky. If you fail to pay the debt within a certain amount of time, it is entirely possible that the creditor or company to whom you owe the debt will send your account to a collection agency. These debts that they send to collections have the potential to greatly damage your credit score, and even land you in the middle of a lawsuit. Other possible actions against you include wage garnishment, account levies, and constant harassment from creditors. Additionally, you might receive poor interest rates and insurance premiums, or even fail to find a good job or good housing. Three main options exist for the future of your unpaid debt.
Third-Party Collection Agencies
Your creditor or lender might send your account to a collection agency. These agencies contact you, either through the mail or via phone, and try to make you pay up. Generally, collectors only have collection assignments that last for 60-90 days. During this time, if they get you to pay even a portion of your debt, they receive a contingency fee from the amount you paid.
Assigning Unpaid Debts to Attorney Firms
Banks or debt buyers vary when it comes to working with banks or collections agencies more. Some banks prefer attorneys, while others prefer collection agencies. The same goes for debt buyers. When an attorney firm gets involved, expect, initially, the same treatment as with collection agencies. Contact you and apply pressure to make your payments. However, they provide you with different options. Usually, they ask you to pay in full, but they also offer payment plans or negotiations for reduced payoffs. Others receive authorization to sue you in court, but this is the least ideal situation.
Selling Unpaid Debt to Investors
In today’s world, debt buyers make up a highly significant portion of the collection industry. They basically buy accounts with charged-off bad debt for a massive discount. In many cases, they either attempt to collect on these accounts to earn more than they paid for it, or they resell the accounts to other buyers who wish to collect. More specifically, some of these “investors” like to specialize in buying bad credit card debt. Usually, they utilize their own resources to collect on these debts, and might even work with collection agencies.
Can You Be Imprisoned For Credit Card Debt?
The short answer is NO. Debtors’ prisons, as they were called in the past, no longer exist. According to the Fair Debt Collection Practices Act, collectors are prohibited from threatening prosecution or jail for credit card debt. So, this is a credit scam. Unfortunately, it is still technically possible to serve time in jail for credit card debt. However, it is not simply for having debt. It is not legal to criminally charge someone for not paying their debts. It is possible to go to prison for fraud for attempting to use a CPN, however.
The process of receiving time in jail for credit card debt involves your creditor or collector suing you in civil court. In this lawsuit, the judge must grant a judgment in favor of the creditor. The judgment generally requires that you either pay your debts as the agreement states, or have your wages garnished to pay for it. After that, if you miss a payment or fail to follow the instructions of the court judgment, the court may hold you in contempt. This step is where the possibility of jail time arises.
What Happens When a Credit Card Company Sues You?
This is not to say that debt collectors or credit card companies cannot use the legal system to collect what they are owed. They may very well file a lawsuit, and it is within their legal right to do so. People who fail to answer these lawsuits end up receiving default judgments against them. These largely mean that the debt collector’s claim is unchallenged, so debtors should not simply disengage when they owe money.
Sometimes, debt piles up to a point where it becomes unmanageable, and many times, this happens because of external circ*mstances that are completely beyond someone’s control. In those cases, a Chapter 7 bankruptcy may help give someone a fresh start in life that could free them from the crushing debt that they face. A Kentucky bankruptcy lawyer might help the debtor navigate the legal process that could result in their getting a new financial beginning in life.
Is It a Crime to Not Pay Credit Card Debt?
Technically, no. Failing to pay your credit card debt is not a crime. While not a crime, it does have serious consequences, like we mentioned above. After the lawsuit judgment, it is entirely possible that you will have a very difficult time obtaining loans, credit cards, and even employment. Additionally, your credit score will take a hit. The only “crime” you might commit is if you fail to follow or abide by court summons and hearings.
If you frequently find yourself wondering, “How much credit card debt is too much?”, our law firm is here for you. With the help of an experienced bankruptcy and credit card debt attorney, there are quite a few options available for your case. These debts and poor financial circ*mstances have a tendency to spiral out of control. That’s why it’s important to speak with an experienced attorney, like those at O’Bryan Law Offices as soon as possible. If you’d like to schedule a free consultation, please call our office at 502-339-0222 today.
As a seasoned expert in the field, I bring a wealth of knowledge on the intricacies of dealing with credit card debt, collection agencies, and the legal aspects surrounding unpaid debts. With a deep understanding of the subject matter, I aim to shed light on the various concepts presented in the provided article.
1. Aggressive Collection Tactics: The article rightly addresses the stress-inducing nature of dealing with credit card debt, especially when collection agencies resort to aggressive tactics. Such tactics can include incessant phone calls, threats, and attempts to coerce individuals into paying their debts. Drawing from my expertise, it's crucial for individuals to be aware of their rights and understand how to handle such situations effectively.
2. Legal Repercussions of Unpaid Debt: Defaulting on credit cards or loans can lead to severe legal consequences. The article mentions potential actions such as wage garnishment, account levies, and constant harassment from creditors. Additionally, it highlights the adverse impact on credit scores, interest rates, insurance premiums, and even one's ability to secure employment or housing. This underlines the importance of taking proactive measures to address unpaid debts.
3. Third-Party Collection Agencies: The article explains that creditors might enlist third-party collection agencies to recover unpaid debts. These agencies operate on a contingency fee basis, incentivizing them to secure at least a partial payment within a specified timeframe. Understanding how these agencies function is essential for individuals navigating debt-related challenges.
4. Assigning Unpaid Debts to Attorney Firms: In some cases, creditors may involve attorney firms in the debt collection process. Attorneys, akin to collection agencies, apply pressure on debtors to pay but may offer different payment options, including full payment, payment plans, or negotiations for reduced payoffs. The mention of potential lawsuits emphasizes the gravity of the situation.
5. Selling Unpaid Debt to Investors: The article delves into the role of debt buyers who purchase charged-off bad debt at a discount. These investors may attempt to collect on the debts or resell them to others. Understanding this aspect is crucial for individuals facing debt collection, as it highlights the complexity and variety of entities involved in the process.
6. Imprisonment for Credit Card Debt: While the article dispels the myth of debtors' prisons, it clarifies that imprisonment is technically possible through a civil court process. This involves a lawsuit, a judgment in favor of the creditor, and the potential for contempt of court if debtors fail to adhere to the judgment, leading to the possibility of jail time.
7. Lawsuits by Credit Card Companies: The article underscores that credit card companies have the legal right to file lawsuits to collect unpaid debts. Default judgments may be issued against individuals who do not respond to these lawsuits, emphasizing the importance of engaging with legal proceedings to avoid severe consequences.
8. Chapter 7 Bankruptcy: In cases where debt becomes unmanageable, the article suggests that Chapter 7 bankruptcy can provide a fresh start. This legal process can help individuals overcome overwhelming debt and navigate towards a new financial beginning. Seeking the guidance of a Kentucky bankruptcy lawyer is recommended for those considering this option.
9. Not Paying Credit Card Debt as a Crime: While failing to pay credit card debt is not a crime, the article highlights the serious consequences, such as difficulty obtaining loans, credit cards, and employment, as well as the negative impact on credit scores. It emphasizes that the only potential "crime" is non-compliance with court summons and hearings.
In conclusion, the provided article covers a comprehensive range of topics related to credit card debt, collection practices, legal repercussions, and potential solutions. Individuals facing such challenges are encouraged to seek professional guidance, such as that offered by O’Bryan Law Offices, to navigate the complexities of debt management and explore available options.
