Consumer Law

Respond to Credit Card Debt Claims

U.S. consumers are $18.7 billion dollars behind on their credit card debt. Increasingly, banks are taking delinquent borrowers to court, suing them for payment.

Often, these borrowers never show up in court to contest the charges. This can be a big mistake. Often, the documents submitted to the court include costly errors.

Failure to Act Has Consequences

When a debtor fails to contest credit card charges or show up in court, the bank or collection agency wins the case by default. The bank or credit cared company can garnish your wages or freeze your bank account.

Costly Mistakes Are Common

Often, banks sell bad credit card loans to collection companies. The debt buyers are supposed to get the documentation that came with the original loan, but this doesn’t always happen. As a result, lenders are churning out lawsuits that rely on false documents, incomplete records and generic witness testimony.

In some cases, the consumer owes no debt at all. In other cases, the amount of debt has been inflated with mistaken fees and interest costs.

JP Morgan Chase

JP Morgan Chase came under investigation in 2012 after a whistleblower charged that the financial giant routinely pressured employees to verify debts that couldn’t be proven.

According to an article in American Banker, “Nearly half of the files her team sampled were missing proofs of judgment or other essential information … nearly a quarter of the files misstated how much the borrower owed.”

How to Respond to a Lawsuit

If you think that you are being pursued for an inaccurate debt, take these steps. Demand to see written proof that you actually owe the debt. Under the Fair Debt Collection Practices Act, debt collectors must provide you with this proof.

Read the documents closely to verify the details, including personal information like the name and social security number associated with the debt. If you think that you are being unjustly pursued for the debt of another person, reply in writing - and keep copies.

Always file a formal written response to the debt collector’s claim with the Court. Failure to do so will be interpreted as an admission that you actually owe this amount.

If you find errors, contact the consumer complaint division of your local attorney general’s office. Also, contact the Consumer Financial Protection Bureau.

A Consumer Lawyer Can Help

The law surrounding credit card debt can be complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a consumer lawyer. If you can’t afford a lawyer, contact your local Legal Aid Office.

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