Protect Against Wrongful Credit Card Lawsuits

Credit Card LawsuitMost consumers are working hard to lower their credit card debt, but there are the millions of others who have outstanding credit card balances that they cannot or will not pay. Credit card companies do not get any pleasure out of sending an account to collections but would rather work with their customers to find a way to keep the account solvent. When an account is sent to a collection agency, in essence the company is accepting that the money will never be repaid according to the terms of the original agreement. In an attempt to recoup even a small portion of their losses, a collection agency takes over the account for the credit card company and works to get payments started.

An Issue to Be Concerned About…

There have been a variety of stories this year about consumers finding themselves wrongly accused of defaulting on their credit cards. There’s no way to know who will be targeted with a false claim, but the reasons are similar to those who fell victim to accusations of mortgage defaults a few years back – incomplete and insufficient documentation handed over when an account is sold to a collection company. The issue is so important that government institutions including the Attorney Generals of 13 states and the Office of the Controller of the Currency have ongoing investigations. Allegations are being considered against many major banks such as Chase, Citi and Bank of America.

There are millions of credit card accounts with erroneous or missing information. As a result, a person with the same name may be served a court order to appear regarding an account they never owned or opened. When incorrect data is recorded, a consumer may be sued for debts that have expired under the statute of limitations or discharged in bankruptcy.

What You Should Do…

So what are you to do if you receive a collection letter, court subpoena or your wages are garnished against a debt you never owed or an account that you never opened?

  1. If the courts are involved, get immediate advice from an attorney.
  2. Request copies of ALL three major credit reports and examine them thoroughly for errors. Be sure that all of your personal information is spelled correctly and that your Social Security Number is correct. Don’t discount discrepancies that you consider minor; even a simple misspelled word can cause havoc if it sends the wrong message.
  3. Protect yourself from being judged because of misinformation and push for corrections. Federal law requires that credit bureaus respond in a timely fashion and provide reasons for denying your request. Be persistent, if you’re confident in your claim. Demand that a note be added to credit reports that have been altered that explain the resolution of any discrepancies.
  4. File a complaint with the Better Business Bureau, your state’s attorney general’s office and the Federal governments Consumer Financial Protection Bureau (CFPB).

Always read carefully every communication you receive from your creditors so that you can be proactive if a problem arises. Safeguard your personal information by maintaining good records for a minimum of seven years. You never know when you may need it; having it on hand will save you from a lot of headaches and wasted time.

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