Dealing with Credit Card Debt Collectors

October 3, 2012, Written By John H. Oldshue

It is becoming more common for cardholders who have fallen behind on credit card debt to be taken to court as issuers explore every option to collect any outstanding balance. Dealing with collections is stressful, and it is beneficial for the debtor to understand the collection process and how to respond.

Banks will do everything they can to collect on their loans and the courtroom is a difficult place for a debtor and lender to collide. If you are behind on your credit card debt, work it out as soon as possible with your issuer. Procrastination and avoidance make things worse. It is also important to know your rights and what the lender can and cannot do.

Collection and Litigation of Credit Card Debt

If you don’t pay at least the minimum payment, you are breaking the agreement with your credit card lender. A cardholder becomes delinquent after missing a single monthly payment. However, the credit card issuer may not report the delinquency to the major credit bureaus until two consecutive payments have been missed. Your credit score will likely begin to drop after the second missed payment.

After 90-180 days in delinquency, your credit card issuer will probably shut down your credit card account. The delinquency goes on your credit report. Credit card debts may be charged-off and turned over to a collection agency. If you feel there is no hope of making the minimum payment now or in the near future, it would be wise to call your credit card issuer to work out a payment plan before your account is turned over to a collection agency or debt collector.

Debt collection is legal and the debt collector can contact you through phone calls, emails and letters. The Fair Debt Collections Practices Act provides guidelines for contact from debt collectors. Dealing with debt collectors can be a time of anxiety and confusion.

Before you make a payment, confirm that your debt has been turned over to that debt collector and verify the amount you still owe. You may be better off negotiating a settlement with the credit card issuer.

If this doesn’t work, the third party collector can sue you and take you to court. They will send you a summons to appear in court. Do not ignore this because if you do not show up, it is an automatic win for the collector. If the debt collector wins the case and receives a judgment, they can seize assets or garnish wages to pay off the debt. The judge could also create a payment plan. If you must go to court, get an attorney who specializes in consumer law.

Pay attention to dates and ask questions. There is a statute of limitations to sue for credit card debt, and if the date has passed, you can have the case dismissed. This statute of limitations is set by the individual state and varies from three to ten years. It is up to you to know and prove this. The debt collector can still attempt to collect the debt, but you must ask if the debt is out of date and the date of your last payment. The collector can not attempt to collect until the date is verified. The statute of limitations clock can start over if you make any type of payment on the debt.

Information about a delinquent account remains on your credit report for seven years from the date you first missed a payment.



The information contained within this article was accurate as of October 3, 2012. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About John H. Oldshue

John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.
View all posts by John H. Oldshue