How to Answer a Summons for Credit Card Debt

A civil summons for credit card debt is a written notification that a lawsuit has been filed against you. According to Illinois Legal Aid, the summons will tell what is required of you -- such as a court appearance on a certain date or your written response to the lawsuit within a certain time frame. Laws and procedures regarding summonses can vary by the state. If you do not respond or fail to meet the deadline for responding, a default judgment will be granted to the credit card company or debt collector. Your wages or bank account could be garnished if a default judgment is granted.

Instructions

1

Read the summons carefully. Also read the complaint or petition, which should be attached. Community Legal Services of Mid-Florida reports that the complaint or petition will explain why you are being sued.

2

Appear in court on the date specified in the summons -- if a court date has been set. Or prepare your response to the complaint if that is being requested.

3

Gather information needed to defend yourself against the lawsuit -- if you have a legal defense. Illinois Legal Aid reports that you will lose in court if your only defense is that you can't afford to pay the debt. Possible legal defenses include identity theft, which allows you to maintain that you never applied for the credit card and that the debt isn't yours. You could also insist that you paid the debt. Documents such as police reports or bank statements could help prove your case.

4

Appear before the judge and offer your defense if a court date was scheduled, or answer the summons in writing by responding to each allegation in the complaint. Community Legal Services of Mid-Florida reports that your answer should be completed on 8-1/2-inch by 11-inch paper and include specific information such as the name of the court and the case number (see Resources). Also include any additional information that you would like the court to consider such as a contention that the debt is not yours. Attach copies of documentation to support your defense.

5

File your answer with the Clerk of the Court where the lawsuit was filed. The address will appear on the summons. File the answer in person within the specified time frame to protect your rights and avoid a default judgment. Also send a copy of your answer to the party that filed suit against you. After you file your response, a court date will be set to hear your case.

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How Do I Know How Much Debt I'm In?

Youll have a hard time finding an adult who doesnt have at least one student loan, credit card, mortgage or car loan. According to USA Today, debt among college students is at record levels. Students are relying on credit cards to pay for their educational expenses. In the book "The Road to Wealth," it states that debt makes it almost impossible to save or invest money. Until you know the amount of your debt, you cannot gain control of your finances.

Make a List of Your Debts

An excellent way to find out what you owe is to write it down. Get a notebook, gather your bills, and write the names of creditors and how much you owe each one. Focus on debts you can get rid of by paying them in full.

Debt such as credit cards, student loans, personal loans, mortgages and car loans belong on the list. Exclude ongoing expenses such as rent and utilities, unless youre behind in payments.

Add all of your expenses together. Do this by hand or with financial software such as Quicken. The total will show you the extent of your debt. Once you have the total amount, youll have a clear idea about how much you owe.
If you dont want the hassle of gathering all of your bills, you can check your credit report instead.

Credit Report

Your credit report provides the facts about your debt. Your accounts are listed by type of loan. If you have credit card accounts, mortgages, students loans, bank loans or credit union loans, youll see them on the report. Youll also see when the accounts were opened, how much you owe and your payment history.

Using the information from your credit report saves time. Instead of waiting to receive all of your bills in the mail, you can see everything at once on the credit report. To see how much you owe, simply add all of your debts together.

Its possible that not all of your debts will appear on the report. Medical expenses, personal loans from friends and family, pawn shop tickets and things of that nature will have to be written down separately.

AnnualCreditReport.com(see resource 2) is a federal website that allows you to check your credit report for free. You can get one copy of your credit report from all three credit reporting agencies. The three agencies are TransUnion, Equifax and Experian.

It helps to see a lump sum of how much you owe. If the majority of your income is spent on debts, then you need a budget or financial counseling.

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The Proper Proof of a Debt Assignee

A debt assignee is a debt collector assigned to collect a debt. Creditors make the assignment after failing to directly collect from the debtor on a delinquent debt. Assignment means the debt collector accepts the debt on commission. The creditor retains ownership of the debt; the debt collector is paid a percentage of the money it collects. After assignment of a debt, the debt collector must notify the debtor. By law, debtors have the right to dispute the debt and ask for verification, or proper proof, of the debt.

Process

After receiving an assignment, debt collectors usually contact the debtor by telephone. The Fair Debt Collection Practices Act, a federal law, requires the debt collector to follow up initial contact with a written notice containing the name of the creditor, the amount of the debt and a statement indicating that the debtor has 30 days to dispute the debt. The debt automatically becomes valid if the debtor fails to dispute the debt within the 30 days, according to the law.

Disputing

The debtor can protect his rights by sending a letter to the debt collector within the 30-day window. The debtor must write that he is disputing the debt and is requesting that the debt collector provide proper proof of the debt. Furthermore, the debtor can demand that all collecting activity on the account end immediately until the debt collector provides the proper proof.

Strategy

The law allows the debtor to dispute the debt even if the debtor knows that the debt is valid. Disputing also begins a paper trail that is useful in the debt collection process. Disputing the debt provides another advantage for the debtor as well. It forces the debt collection agency to request proof of the debt from the original creditor. The debt collector then sends the proof to the debtor. The entire process can take weeks or months, giving the debtor time to gather money to pay the debt or begin a payment plan.

Proof

Proof from the debt collector can range from a copy of a signed credit card agreement to the most recent billing statement. Or the debt collector may send copies of every billing statement since the start of the account. The intent by the debt collector is to show proof of assignment on the account, establishing a legal right to collect from you. Sending the proof allows the debt collector to resume all debt collection efforts.

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Help With Overwhelming Debt

Individuals swamped with debt find themselves in an indefensible situation. Hit with penalty fees for late payments and punitive interest rates, these debtors often find themselves making payments that merely service the interest on the debtor, but never attack the principal. As people slide deeper into debt, they may fear that they will lose many of the things they have worked hard to achieve in life. There are a number of options for overwhelmed debtors.

Debt Counseling

One of the simplest options for debtors is to receive some form of counseling. There are a number of nonprofit organizations that provide free or low-cost credit counseling to individuals whose bills have become unmanageable. However, debtors should exercise caution in who they seek for advice. Some counselors charge high fees, while others are in fact financed in part by credit card companies, meaning they may not have the debtor's best interests at heart.

Debt Consolidation

Some debtors who must cut a number of checks each month will sometimes choose to approach a lender about consolidating their debt. When debts are consolidated, it means that a lender will issue the debtor a new loan in exchange for buying the debtor's old debts and paying them off. In some cases, this will increase the debtor's overall debt load, but may reduce the size of their monthly payments.

Debt Settlement

Some debtors can directly negotiate with their creditors to receive a reduction in the amount of money they owe. Many creditors are willing to accept partial payment of a debt for several reasons. First, the cost of attempting to collect on the debt may exceed the amount of money the creditor expects to extract from the debtor. Secondly, a creditor may fear the debtor will declare bankruptcy and have some of his debts dismissed. Debtors should be aware that settling a debt for partial payment may hurt his credit rating.

Bankruptcy

The last resort for debtors who have unmanageable debt is to declare bankruptcy. A bankruptcy declaration is a legal declaration the debtor does not have the funds necessary to pay the money he owes to his creditors. These declarations come in two types--Chapter 7 and Chapter 13. The downside to declaring bankruptcy is, in the case of Chapter 7, the person may have to surrender some personal assets, and, for both types, his credit rating will be damaged.

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Are Credit Card Balances Sold to Collection Agencies?

Carrying unpaid accounts on its books is unprofitable for a credit card company. Your credit card company provides you with a certain amount of time in which to pay off or make payment arrangements on your delinquent account before selling or transferring your debt to a collection agency. Credit card companies typically sell unpaid accounts to collection agencies after 180 days.

How It Works

If your credit card company sells your credit card balance, it loses its right to collect the amount you owe. The collection agency assumes legal ownership of your account and has full rights to your debt. Thus, if you make a payment on your delinquent credit card debt, you must pay the collection agency directly rather than your original creditor.

Not all credit card companies sell unpaid debts to collection agencies. Some merely transfer consumer debts. When a credit card company transfers your debt, it retains legal ownership of your account but agrees to pay the collection agency a percentage of any balance it collects.

Purchase Price

Collection agencies purchase debts from credit card companies for far less than consumers owe. The sale price of your account depends upon your credit card provider and the collection agency it conducts business with. The longer your account has been delinquent, the less collection agencies pay to purchase it. In some cases, debt collectors pay mere pennies on the dollar for defaulted debts.

Collection Activity

Collection agencies use information about you provided by the credit card company, such as your telephone number and address, to contact you and demand payment. Although a collection agency has the legal right to contact you about your debt, the Fair Debt Collection Practices Act mandates that debt collectors may not use obscenities or physical threats, disclose your debt to anyone other than you or threaten to take any recourse against you, such as garnishing your wages, if the action is not legal in your state of residence.

Additional Charges

The FDCPA notes that certain restrictions apply to collection agencies when levying additional charges against consumers. Although debt collectors can add fees to your account, they cannot charge you interest unless your original creditor charged you interest. Because credit card companies routinely charge customers interest, however, a collection agency that purchases your delinquent credit card account can add additional interest charges to your debt.

Credit Damage

The fact that you defaulted on your obligations to your credit card company appears on your credit report -- lowering your credit rating. After purchasing your debt, a collection agency also reports the debt to the credit bureaus. All collection accounts are derogatory and have a negative effect on your credit score. The Fair Credit Reporting Act permits derogatory notations to remain within your credit file for seven years.

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Garnishment Laws in the State of Ohio for Credit Card Debt

Creditors, including credit card companies, can use garnishment as one way of collecting a debt from an Ohio debtor. In a garnishment, a debtor's employers and banks can be required to turn over his wages and funds to satisfy a debt. Ohio law provides certain protections for debtors, including exemptions and limits on assets that can be garnished.

Legal Hearing and Notice

Credit card companies cannot garnish assets without first winning a court judgment against the debtor. If a creditor does win its lawsuit against the debtor and the debtor does not voluntarily pay the debt, the creditor can file to garnish the debtor's wages and bank account. In the case of a wage garnishment, the creditor must send the debtor, via certified mail, a notice that it plans to file for garnishment of wages after 15 days have passed. The creditor does not have to mail a notice if it plans to garnish a debtor's bank account. Once appropriate notice is given and the 15-day period has passed, the creditor can then file a garnishment at its local county courthouse within the next 45 days.

Exempt Sources

Certain types of assets and income, such as workers' compensation, unemployment, disability, Social Security and welfare benefits, cannot be garnished in Ohio. A debtor has the responsibility to request a court hearing so that he can document that his income and assets are exempt from garnishment.

Wage Garnishments

Wage garnishments require an employer to turn over 25 percent of an employee's weekly earnings, after taxes, to the court until the debt is satisfied. The money turned over to the court is then given to the creditor. If a creditor fails to file for wage garnishment within the 45 days following the 15-day notification period, the creditor must send another 15-day notice to the debtor before filing for garnishment.

Non-wage Garnishments

In a non-wage garnishment, the creditor can ask the court to seize funds in a debtor's bank account. Ohio law does make $400 of bank funds exempt from garnishment, so all funds over and above $400, up to the amount of the debt, can be seized on behalf of a creditor.

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Can People Put a Lien on Your Home Due to Unpaid Medical Bills?

Unpaid bills for medical services can result in a lien on your home from the medical service provider, such as your doctor, a hospital or medical laboratory. A lien on your house gives the creditor, or lien holder, a type of legal interest in your home and makes selling or financing the home more difficult.

Function

Some medical creditors must go to court and get a judgment against you before a lien is filed; you receive notice of the action from court by mail or served on you in person. The court issues the judgment after the creditor has given the court evidence of your medical debt and the time for you to contest or answer the action has passed. A "default" judgment is granted to the creditor if you do not show up to court at all. The creditor then files the judgment in the local county land records, creating a lien on any real estate you own in that county.

Effects

The lien must be addressed if you try to sell, refinance or take a new mortgage out on your home. Your lender usually requires the lien be paid in full before you are allowed to mortgage or refinance; you may be able to obtain a release of your home from the lien by the medical service provider if you are refinancing and not taking out additional money. Part of your proceeds from a sale go to the medical creditor in return for a release if you are selling.

Considerations

Liens for medical debt terminate after a number of years, usually 10 years from the date the lien was filed in the land records. Medicaid, the federal low-income health insurance program, and Medicare, the federal health insurance program for the elderly, both have special rules for liens and do not need court judgments. A lien placed by either program on your home because you are in a hospital or nursing home may dissolve if you return home.

Unpaid medical bills resulting in liens on your home can usually be included in bankruptcy, the federal court process that allows you to eliminate your debt or make a court-enforced payment schedule with your creditors.

Misconceptions

Private medical creditors generally do not attempt to take a home to satisfy a lien because of other deterrents. State legislation may prohibit the action if your income is under a certain amount. The cost of the court process may be too high when compared with your actual debt, and other creditors with more legal priority, such as a first mortgage lender, must be considered by the medical creditor.

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