How to Assume Debt

To assume debt is to take on a debt that previously was owned by someone else with the obligation to eventually pay it off. Most lenders will not allow you to do this except in the case of the death of an original debtor to whom you were married. In such a case, the lender will generally provide you with a contract to sign. In private debt, however, you can make your own rules, which involves writing up your own contracts.

Instructions

1

Draw up a contract, beginning with the date and names of the parties involved. A contract of assumption of debt always involves three parties: the creditor, the debtor and the customer. The debtor assumes the customer's debt.

2

Write the main statements of the agreement, declaring the current state of affairs, including the exact amount owed. State that you, the debtor, agree to assume the customer's debt, and that you now owe the creditor the amount in question.

3

Enter the terms of payment, such as how long you have to pay off the debt and any interest involved. This will vary from contract to contract and is contingent upon the decision made between you and the creditor.

4

Sign the contract. To be binding, the contract must be signed by all three parties and witnesses.

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How to Stop Payday Loan Companies From Calling Your Employer

Under federal law, creditors must refrain from contacting you at work if you request that the phone calls stop. The law extends to payday loan companies and any other creditor who may contact you. Some collection agencies may ask that the request be made in writing, and some may accept your verbal request. Regardless of the method you use, document your request. If the payday loan company continues to contact your employer after you request alternate contact, you may file a harassment claim against the company.

Instructions

1

Tell the payday loan agent you may not receive phone calls at work.

2

Provide alternate information for the payday loan company to contact you, such as another phone number or address. You may also request that no more phone communication be made to any phone number, and that any further communication concerning the debt be made in writing.

3

Write a letter that lists the same information to the payday loan company if the agent requests one. Include the date of your letter and reference any account number the payday loan company uses to identify your account. If the payday loan collector accepts your request verbally, document your phone conversation for your records.

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Help With Credit Card Defense

Illinois Legal Aid offers blunt advice for defending a credit card lawsuit: settle out of court by agreeing to a payment plan. The nonprofit organization staffed by attorneys reports that people rarely win credit card lawsuits. There are exceptions, including one that is very effective. State statute of limitation laws are arguably the best defense in a credit card lawsuit -- if your case is eligible for the protection.

Statute of Limitations

Statutes of limitations are state laws and they vary by the state. They determine how much time creditors have to use the courts to collect on defaulted credit accounts. Generally, the average on credit card debt is about six years after the last activity on the card, such as a payment or the date the company charged off the account and sent it to a collections agency. Accounts beyond the statute of limitations are too old for consideration by the court -- a situation known as "time-barred" for collection.

Case Study

"The New York Times" reported in 2010 how a man successfully defended himself in a credit card case by sending a note to the judge that the debt was beyond his state's statute of limitations. The judge dismissed the case. Information about statutes of limitation is available from the local office of your state attorney general. People seeking statute of limitations as a defense must get correct information about the law and should consult an attorney or a local legal aid office. Contact information for a local legal aid agency or similar organization generally is available by calling your public library.

Few Options

There are few other reasonable defenses against a credit card lawsuit. Illinois Legal Aid reports that explaining to the judge that you could not pay because of job loss, divorce or illness will not lead to a successful defense. The judge looks for a strong defense backed by law, such as identify theft. Financial hardships are understandable but do not relieve you of responsibility.

Luck

Luck sometimes plays a role when there is no statute of limitation defense available. Debt collection agencies working on commission generally file credit card lawsuits. Some are top-notch at what they do, while others are not. There is always a chance that the attorney will fail to show for the court hearing or will arrive unprepared and without the full documentation needed to prove the case. The judge will dismiss the case if that happens. However, stakes in a credit card lawsuit are high. Showing up hoping for a miracle is usually not a good strategy.

Judgments

The judge can hand down a monetary judgment if he agrees with the attorney for the debt collector that the credit card debt is valid and that you stopped paying. A judgment requires you to pay the full amount due plus attorney's fees and court costs. If you refuse to pay, the debt collector can request garnishment of your bank account or wages.

Settlement

People without suitable defenses should settle out of court. The lawsuit and threat of a judgment gives the debt collector the upper hand in settlement negotiations, however. The debt collector is likely to seek full payment and may consider installments. That's usually preferable to a judgment and possible garnishment.

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Can a Credit Card Company Sue You Over Non-Payment of an Unsecured Debt?

If you have credit card debt and you refuse to make payments on it, your credit card company could potentially eventually sue you. If you have a lawsuit filed against you by a credit card company, there are many things that could happen, including having your wages garnished or your property taken.

Collection

If you are more than 60 days behind on your credit card payment, your credit card company most likely will place your account in collections. They may handle this internally or outsource it to a collections agency. This means that you will start receiving phone calls from the collections agent. You will also receive a notice in the mail asking you to pay your bill. At this point, they will be very persistent in trying to recover the debt by contacting you repeatedly.

Lawsuit

If you do not repay the debt once it is in collections for a certain amount of time, the credit card company may decide to file a lawsuit against you. At that point, you will receive a notice from your local court system that a lawsuit has been filed against you. You will have to appear in court and argue your case in front of a judge. Most of the time, the credit card company will win the case if they can prove that you accumulated the debt.

Wage Garnishment

If you lose the case against the credit card company, one of the things that could happen to you is wage garnishment. This is a situation in which part of your pay is taken out of your paycheck every time that you are paid. When trying to determine if they will pursue wage garnishment, a credit card company will look at your employment history. If you have been in the same job for many years, you make a good candidate for wage garnishment.

Lien

Another potential consequence of having a lawsuit filed against you is that your property could have a lien placed on it. If you have property with value in it, the judge could order a lien placed on it. This means that you cannot sell the property without addressing the debt first. For example, the judge could place a lien on your house. When you sell the house, the proceeds from the sale would go to paying off the debt first.

Options

When you get in trouble with credit card debt, it is important to handle it as quickly as you can before allowing a lawsuit to be filed. There are a number of options for addressing debt. For example, you could take out a home equity loan and use it to pay off your debt. You could also transfer your credit card balance to a new card with an introductory zero percent interest rate, but only do this if you can quickly pay the balance.

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Can I Open a Credit Card for My Child?

There are two useful ways to allow children to use credit cards. Parents may cosign a credit application for their children, and set a low balance limit on the card. In addition, it is possible to "charge" a prepaid card with funds and allow your child to use it for purchases. Prepaid cards can be a convenient way to allow your children some independence and to teach basic money management. Parents should set clear rules for its use, however, and monitor activity in the account.

Application

Credit card companies do not offer credit cards to individual minors, but they can and do mail offers to kids of high school age while requiring parents to cosign the account. Parents should take into consideration the ability of the child to handle money and debt responsibly and always set a low limit so that the card is not overused and charges don't pile up. In addition, credit card companies such as MasterCard and Visa allow parents to apply for prepaid cards, a safer alternative that is issued in the child's name. If the application is accepted, the parent can then deposit money into the account by using a check, credit card or bank transfer.

Use

Cards carrying the Visa or MasterCard logo can be used universally at any retail outlet or Internet site that accepts credit card payments. For a prepaid card, once the money is credited, the funds are available for purchases. There is no credit limit per se, as the user cannot charge more than the available funds. When a purchase is made, the amount is deducted from the balance. When the funds run out, the card will be declined if the user attempts to buy anything with it.

Cancellation

Parents who cosign for cards may cancel them at any time if the account runs into problems, such as over-the-limit fees and late fees. If a prepaid card is lost or stolen, it can be "frozen" with a phone call to the issuer. This makes a prepaid credit card safer than carrying cash around. Should fraud occur, the card can be cancelled, any unauthorized use refunded and the balance transferred to a new card.

Fees

Ordinary credit cards carry high interest rates that compound monthly. There are no interest charges on a prepaid card because there is no borrowing. Prepaid accounts are also free from late fees, over-the-limit charges and other penalties. However, the card issuer may charge an activation fee to begin the account, as well as regular access fees or transfer fees when money is put on the card. In addition, when any kind of credit card is used to retrieve cash from an ATM, there will be a fee charged.

Prepaid Gift Cards

Another option is the prepaid gift card, which you can purchase at retailers such as Target, Wal-Mart, Best Buy and other stores. The prepaid card is for use at the business that sells it, however, and cannot be used for purchases elsewhere. Gift cards are not a good option if you want your children to carry a card for emergency spending.

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Can a Credit Card Judgment Follow Me to Another State?

Credit card companies will pursue a customer for payment on a delinquent account. Collection efforts start informally through internal collection personnel or third party agencies. If the customer still fails to pay, the credit card company has two choices: write off the debt and stop pursuing collection or hire a lawyer to sue the debtor.

Credit Card Judgments

The credit card company's lawyer will sue the customer in the appropriate jurisdiction -- usually the state where the customer lives. If successful in the lawsuit, the court issues a judgment in favor of the creditor. The recorded judgment attaches as a lien against the debtor's property.

Judgments Follow Debtors

A judgment debtor who moves to another state does not get to leave the judgment behind in her previous state of residence. Moving will burden the creditor with some additional procedural steps to enforce the judgment, but Section 1 of Article VI of the United States Constitution requires states to give full faith and credit (i.e., recognize and permit enforcement) to judgments from the courts of other states.

Uniform Enforcement of Judgments

The Constitution requires states to give full faith and credit to each other's judgments, but it does not specify how to implement that requirement; each state must adopt its own procedural requirements. The National Conference of Commissioners on Uniform State Laws created the Uniform Enforcement of Judgments Act to help states do so. Almost all states have adopted the this act.

Domesticating a Judgment

Attorneys refer to the process of moving a judgment to a new state to follow a debtor as domesticating or entering the judgment. Collection attorneys domesticate judgments in states where the debtor has assets that they can go after to satisfy the judgment. Depending on the procedure used in that state and whether the debtor objects, this could result in a hearing and delays in enforcement.

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What Are the Effects of Garnished Wages?

Wage garnishment is a collection strategy that creditors can use to recover unpaid debt from you if you ignore your creditor or otherwise demonstrate unwillingness to repay your debt. Except in cases involving child support and federal and state taxes, this action typically follows a civil lawsuit and a judgment against you from a court in your state. Wage garnishment can have several effects on your personal finances.

Reduction in Income

If you earn more than 30 times the federal hourly minimum wage per week, wage garnishment can affect your finances by reducing your take-home pay. Federal law permits judgment creditors to take the portion of your post-tax earnings above this threshold, or 25 percent of your post-tax earnings, whichever is less. In cases involving unpaid taxes and child support, garnishment may reduce your income by up to 60 percent. However, some states provide more stringent restrictions on garnishment than the limitations imposed under federal law, and four states -- South Carolina, Texas, North Carolina and Pennsylvania -- prohibit wage garnishment for most types of debts.

Loss of Employment

Under federal law, an employer cannot fire you for incurring wage garnishment ordered by one creditor in a 12-month period. However, if two or more creditors order garnishment in the same 12-month period, the law does not protect your job. Because the employer's role in wage garnishment is time consuming and costly, your employer may discharge you if you incur multiple garnishments.

Disqualification From Future Employment

When you apply for a new job, either as a career change strategy or after being fired for multiple garnishments, your prospective employer will likely inquire about outstanding civil judgments. Some employers also run background checks, which can include public records and your credit file, before making a firm employment offer. If a judgment puts you at risk of garnishment, the prospective employer may not want to dedicate the expense and resources necessary to fulfilling a wage garnishment order. For this reason, the employer may decline to offer you a job.

Credit Damage

If you have fallen behind on debt payments, your credit has likely already suffered from delinquent account entries. However, the civil judgment that typically precedes wage garnishment can have a more dramatic impact on your credit score than a delinquency report. Credit bureaus routinely review public records to look for judgments, which they add to judgment debtors' credit files. A judgment entry on your credit report can severely limit your ability to obtain future credit for up to seven years.

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