We've warned you about this before: If you rack up big credit card debts, it's perfectly legal for those credit card companies -- or the debt collection firms they sell the debts to after they've been written off -- to sue you to try and reclaim what you owe them. What happens then is unsettling: You can have your wages or even your bank account garnished (government benefits and accounts that contain only those funds are exempt).
And the number of Americans who've found creditors dipping into their paychecks is on the rise, according to this article from The New York Times. This makes it even harder for Americans who are already struggling to get or stay current on their bills to stay on track.
If you receive notice that a creditor's planning to take you to court, it's definitely worth your while to show up. If you don't come to court for the settlement, the creditor wins by default. That's unfortunate, because many creditors can't provide the necessary documents to stand up to a challenge from a well-informed debtor.
"One of the things they should do is demand to see the documents that support the claim that they owe money," National Consumer Law Center staff attorney Charles Delbaum told WalletPop in an interview. "Usually the debt buyer who buys the debt for pennies on the dollar doesn't receive any documentation. They usually can't prove how much is actually owed." As a result, you could possibly get those debts dismissed just by showing up and demanding proof. Delbaum says sometimes people being sued by a collector find that their identity was stolen and the debt wasn't created by them, or extra charges or fees have been snuck into the amount they say you owe.
Delbaum says that state legal aid societies can generally help with representation if you can't scrape together the money for a lawyer. "What people have to do is not ignore the notice they receive from court and attend the court proceedings," he says. It might not be a pleasant experience, and if your creditor is well-prepared, you could certainly be ordered to pay back what you owe. But you owe it to yourself to attend the court hearing as required, because you could wind up getting relief.
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