We have frequently mentioned the need to challenge credit card companies when they file a suit to recover the debt owed. Credit card companies rely on one factor when filing for a judgement on a debt, and that’s the habit of most debtors to ignore the matter altogether. When the suit is not defended, the credit card company receives a default judgement; in effect, a rubber stamp on their law suit. If the credit card company is looking for a garnishment on your wages, or a bank levy, then filing for bankruptcy can stop that judgement. If the credit card company seeks to gain a lien on your property, then bankruptcy may not stop that process. The credit card company has, in effect, turned an unsecured debt into a secured debt, and that’s how the bankruptcy court will see it.

If you engage an attorney, they can file a “Complaint to Avoid a Judgment Lien” – this is a special action that is asking the bankruptcy court to set aside the lien on your property.  If the property is exempt under the Bankruptcy Act, then the court may also set aside the lien. These are certainly complex processes to navigate, especially if your are filing pro se (without an attorney).

Naturally, it is always better to avoid these situations where possible. Once you receive notification that a credit card company (or any other unsecured creditor for that matter) has filed a suit to recover a debt, contact an attorney. What most people don’t realize is that credit card companies are dealing with thousands of overdue accounts each day. They are looking for a quick fix, and too recover as much money as possible at the lowest cost possible.

For a creditor, seeking a judgement, then having your assets assessed, seized and sold all cost a considerable amount. If your attorney contacts them with a reasonable offer, they will most likely accept it – it fulfills their aim of collecting as much as possible as cheaply as possible. Of course, that means you have to have access to the funds required to settle on that debt. If you do, then you’ll save yourself the costly (in many ways) process of bankruptcy, and avoid having a default judgement entered on your credit history.

Related posts:

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  2. Bankruptcy, Credit Cards And Married Couples
  3. Accessing Post Bankruptcy Credit Cards
  4. Christmas The Worst Time Of Year For Credit Cards
  5. Bankruptcy Is Not Always The Cure For Credit Card Debt