Friday, June 6, 2003

What Documents Are Needed in a Credit Card Bill Lawsuit?

If you go into default on your credit card bill, meaning you do not pay the bill as agreed when you signed up for the card, your creditor can sue you. Usually creditors do not sue unless they have exhausted all other options, such as written letters and phone calls. Credit card lawsuits can severely damage your credit or wreak havoc with your finances, so it is best to avoid them if at all possible.

Account Statements

    Your creditor or the collections agency acting on its behalf must be able to prove that you owe the amount the creditor is asking for. Ideally, the creditor should be able to provide all of your account statements. At a minimum, they must provide your final account statement. The account statement should clearly delineate all charges you owe, including your principal balance, interest and finance charges.

Credit Card Application

    The creditor must present your original, signed credit card application. This application serves as a contract. Therefore, if the creditor presents it in court, it is proof that you understood the terms of the agreement. It also demonstrates that all the charges the creditor assessed for non-payment follow the agreement so that you cannot claim that the charges are invalid. If the creditor does not have your original application, he may be able to use your account statements as proof that you agreed to pay your bill each month.

Proof of Transfer

    If the credit card company uses a collection agency, it must be able to prove that it has a legitimate right to collect the debt. Usually it can do this by showing a contract between itself and the credit card company. A creditor may not be able to get a judgment against a debtor if it cannot prove that it has a right to collect the debt.

Avoiding Lawsuits

    The best way to avoid lawsuits is to pay all your bills on time or negotiate payment arrangements with your creditors if you cannot pay a bill as agreed. If you go into default, an attorney can help you negotiate a settlement with creditors so that you can avoid the cost and inconvenience of a lawsuit. It is often worth it to do this, as creditors often request wage garnishment if they obtain a judgment against you, and judgments automatically appear on your credit report.

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