who should i talk with lawyer or credit consultant for old credit card debt

It's often a good idea to at least consult with an attorney to discuss your options if you get served with a credit card debt lawsuit. By Amy Loftsgordon, Attorney If your credit card company sues you, you'll need to decide if it's worth paying an attorney to help you. In most cases, it is.

Full Answer

Do I need a lawyer for credit card debt?

An attorney can help you with this. You aren’t the person who owes the debt. Credit card companies often sell unpaid debts to a debt collector and that party eventually files the lawsuit. Debt collectors sometimes sue the wrong person.

What should I do if I am being contacted by creditors?

Here are a few things to do: 1 Gather all paperwork related to your debts. If you’re contacted by creditors or collectors, keep a log of the contacts, including time and date of phone calls. ... 2 Contact an attorney to go over you case. ... 3 Let the attorney you’re interviewing ask questions. ...

Can a lawyer negotiate with a creditor or debt collector?

But dealing with a creditor or debt collector can be frustrating and time-consuming. An attorney can negotiate with the creditor or debt collector on your behalf to reduce the amount you owe and settle the suit. If you're unsure of what to say to a creditor or debt collector, you could inadvertently hurt your situation.

How can a credit counselor help you manage debt?

A counselor at a credit counseling agency can use your financial documentation to present you options and develop a debt management plan. Since the initial consultation at a credit counseling agency is generally free, you really have nothing to lose.

What is a reasonable settlement offer for credit card debt?

When you're negotiating with a creditor, try to settle your debt for 50% or less, which is a realistic goal based on creditors' history with debt settlement. If you owe $3,000, shoot for a settlement of up to $1,500.

Is it better to settle or pay in full old debt?

It is always better to pay off your debt in full if possible. While settling an account won't damage your credit as much as not paying at all, a status of "settled" on your credit report is still considered negative.

Can you dispute a debt if it was sold to a collection agency?

Within 30 days of receiving the written notice of debt, send a written dispute to the debt collection agency. You can use this sample dispute letter (PDF) as a model. Once you dispute the debt, the debt collector must stop all debt collection activities until it sends you verification of the debt.

How do you negotiate a credit card settlement?

What is the credit card settlement processVisit the issuer or a debt settlement agency.Explain your inability to make payments via a credit card settlement letter and mention that you're open to negotiating other repayment terms.Offer a lump sum or inform the issuer of your plans to file for bankruptcy.

What is a goodwill request for deletion?

The goodwill deletion request letter is based on the age-old principle that everyone makes mistakes. It is, simply put, the practice of admitting a mistake to a lender and asking them not to penalize you for it. Obviously, this usually works only with one-time, low-level items like 30-day late payments.

How do I pay off old debt in collections?

If you have a debt in collections, follow these steps to pay it off.Confirm that the debt is yours. ... Check your state's statute of limitations. ... Know your debt collection rights. ... Figure out how much you can afford to pay. ... Ask to have your account deleted. ... Set up a payment plan. ... Make your payment. ... Document everything.

How do I write a letter to the credit bureau to remove old debt?

Your letter should clearly identify each item in your report you dispute, state the facts, explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your credit report with the items in question circled.

What is a 609 dispute letter?

A 609 dispute letter is a letter sent to the bureaus requesting this information is actually not a dispute but is simply a way of requesting that the credit bureaus provide you with certain documentation that substantiates the authenticity of the bureaus' reporting.

Should I pay the original creditor Instead collection?

If a Creditor Sells Debt, are you Obligated to Pay? Unfortunately, you're still obligated to pay a debt even if the original creditor sells it to a collection agency. As long as you legally consented to repay your loan in the first place, it doesn't matter who owns it.

Is it OK to settle with a credit card company?

Debt settlement is the right choice for some people, but keep in mind that it will lower your credit score and make it harder to borrow money in the future. Even if you do qualify for future credit, your interest rates will be much higher than they would be if you had an excellent credit score.

Can you settle credit card debt after a lawsuit?

You can resolve your debt after the suit is filed by sending a Debt Lawsuit Settlement Letter. After filing your Answer into the case, you should begin the process of negotiating a settlement. Most creditors/collectors want to reach a settlement, and they will often settle for less than the amount you actually owe.

Is it worth it to settle debt?

The short answer: Yes, debt settlement is worth it if all of your debt is with a single creditor, and you're able to offer a lump sum of money to settle your debt. If you're carrying a high credit card balance or a lot of debt, a settlement offer may be the right option for you.

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How to stop debt collectors from calling?

Here are some common reasons to seek legal advice: 1 Debt collectors are calling you at home or work all the time. If you’re getting a lot of calls and can’t stop them with a request that the debt collectors desist, it might be time to bring in an attorney who can discuss your rights and speak to the creditors contacting you. 2 You’ve reviewed your finances with the help of a nonprofit debt counselor and have concluded that you are unable to repay your loans. 3 A creditor is threatening you with a lawsuit or has filed suit. 4 Debt collectors are treating you in a way that you feel is abusive. 5 Your creditor has repossessed your car and might be threatening you with a collection suit.

Why are debt lawyers so popular?

Debt lawyers have become more prominent because household debt in the U.S. has jumped 11% over the last decade to an average of $134,643 (including mortgages) and credit card and auto loan debt are going over the $1 trillion, mark.

What does it mean when a creditor threatens you?

A creditor is threatening you with a lawsuit or has filed suit. Debt collectors are treating you in a way that you feel is abusive. Your creditor has repossessed your car and might be threatening you with a collection suit.

What do debt attorneys do in bankruptcy?

With a bankruptcy, a debt attorney will help you prepare all the required paperwork you need in your case. They can answer your questions and give you a basic rundown on rules and procedures in the courtroom.

What happens if you don't pay a judgment?

If you don’t do either – and that is what happens in most cases – the creditor obtain a legal judgment against you and can pursue that until you finish paying it. Before deciding whether to hire a lawyer, defend yourself or let the creditor collect on a judgment, review the situation.

What is debt lawyer?

A debt lawyer is someone with the knowledge, credentials and skill to help consumers struggling with debt sort through their financial troubles. Representing clients in cases against debt collectors is a form of consumer law, the branch dedicated to protecting consumers against unfair trade and credit practices.

Why do people need debt lawyers?

Those people are seeking help from debt lawyers to fight back against aggressive debt collectors in court. If a debt collector is relentless in trying to recover money you owe, a debt lawyer is a good resource to help you understand your rights and provide a path to escape harassment or illegal tactics.

What does a debt settlement lawyer do?

A lawyer can also represent you if a creditor files a lawsuit. Debt settlement companies can't do these things.

What is a good attorney?

A good attorney will go over all of your options. The attorney can help you figure out if you really should try to settle your debts or whether you should do something else, like file for bankruptcy, for example. A debt settlement company will probably just try to convince you to hire it to settle the debts.

How does a debt settlement company work?

Debt settlement companies often claim that they'll be able to talk your creditors into settling your unsecured debts for pennies on the dollar. If you're current on your payments, they'll tell you the creditors won't settle unless you stop making payments.

Do creditors have to accept lesser amounts?

They also probably won't tell you that your creditors don't have to accept a lesser amount than they're owed to settle the debt or that many creditors won't agree to a settlement, especially if you're working with a debt settlement company.

Do attorneys have to be licensed to settle debt?

Attorneys must be licensed and are supposed to uphold strict ethical standards. Unfortunately, not all do. Some debt settlement companies employ lawyers to act essentially as fronts (or, in some cases, attorneys might team up with a debt settlement company) to provide the company an appearance of legitimacy.

Is a debt of $600 taxable?

The IRS generally considers canceled debt of $600 or more as taxable, and settling debts for less than what's owed can increase your tax liability depending on your tax bracket and the canceled amount. Consult a tax professional for more information. Talk to a Lawyer.

Can you keep your retirement account in bankruptcy?

If bankruptcy might be inevitable, think twice before using retirement funds to pay bills. Most people can keep their retirement account in bankruptcy.

What to do if creditor keeps old debt on report?

If, despite your best efforts, the creditor or collector is keeping old debt on your report, an attorney can also advise you as to whether a lawsuit is a good option. If you do talk to an attorney, choose one who specializes in consumer rights, Smith-Valentine says.

What to do if a debt is too old to be reported?

If the debt really is too old to be reported, it’s time to write to the credit bureau (s) to request its removal. When you dispute an old debt, the bureau will open an investigation and ask the creditor reporting it to verify the debt. If it can’t, the debt has to come off your report.

How long does it take for a debt to be removed from your credit report?

In theory, debts should be automatically removed from your credit report once they reach their legal expiration (seven or 10 years). If you see debts on your credit report that are older than that, you’ll want to contact both the creditor and the credit bureau by mail requesting a return receipt.

How long does a credit bureau have to investigate a claim?

As with the credit bureau, send the letter certified with a return receipt requested. The creditor has 30 days to investigate your claims and respond.

How long does it take for a credit report to come off?

The Fair Credit Reporting Act requires credit bureaus to correct or delete any information that can’t be verified or that is incorrect or incomplete, typically within 30 days.

How to find out if my credit report is free?

To find out, get a copy of all three of your reports. Federal law entitles you to request a free copy of each report once every 12 months. You can download them for free at AnnualCreditReport.com. Once you find out which bureaus are listing the debt, contact them.

How long can a debt collector sue you?

Each state has a statute of limitations about how long a debt collector can pursue old debt. For most states, this ranges between four and six years. These statutes govern the amount of time that a debt collector can sue you, but there is no limit to how long a collector has to try and collect on a debt.

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Summary

Paying down large amounts of credit card debt can be challenging. You do have the option to negotiate with your credit card issuer which can lighten your financial load.

Why negotiate credit card debt?

If you find yourself in over your head with credit card debt, it’s a good idea to see what your issuer can do to ease your load. The ultimate goal of negotiating credit card debt “almost always is to reduce monthly expenses,” said Michael Sullivan, personal financial consultant at Take Charge America.

Types of credit card debt settlements

There are varied approaches to settling your credit card debt for less than you actually owe. If you decide to negotiate your credit card debt, consider the following suggestions from Sterling and Paul Sundin, CPA and tax strategist:

How to negotiate credit card debt

Negotiating your debt is a manageable process – Sterling recommends the following approach:

How does credit card debt settlement affect your credit score?

It’s understandable if you have concerns surrounding how the debt settlement process will affect your credit score. Unfortunately, debt settlement can hurt your credit score. If you settle a debt with a creditor for less money than you originally owed, this can result in lowering your score by as much as 45 to 125 points.

Alternatives to debt settlement

Debt settlement is not your only option for getting out from under your credit card debt. Let’s take a look at some other options for debt relief that may be available to you.

How does credit counseling work?

Under a debt management plan, the credit counseling agency works with you and your creditors on a financial plan. You deposit money with the credit counseling organization each month, and the organization uses your deposits to pay your creditors on schedule. These programs do have qualification requirements and there is typically a fee.

How to find out how much you owe on a credit card?

If you have multiple credit cards, go through your statements and make an itemized list of how much you owe on each card and the respective interest rate. Also jot down the customer service phone numbers.

What to do with a workout agreement?

With a workout agreement, you can ask your credit card company to do the following: Waive or reduce the minimum monthly payment. Lower your interest rate. Remove past late fees. These actions can reduce your overall debt and help you pay off the balance in a shorter time frame.

What is settlement for credit card companies?

For-profit companies offer to negotiate with your credit card company and try to get them to agree to a “settlement” to resolve your debt (typically, the “settlement” is a lump sum payment that is less than the full amount you owe).

Is a debt of $600 taxable?

There are tax implications too, since forgiven debt of $600 or more may be considered taxable income , Sullivan says. A hardship plan may also affect your credit scores, depending on how it’s reported to the credit bureaus. And your debt is deferred — not forgiven — so you still must pay it.

Can a credit card company cut your credit line?

The settlement you choose will depend on your financial situation. With a workout agreement, your credit card company will likely cut your credit line, rendering your card unusable.

Can credit card companies come after you?

Credit card debt is typically unsecured debt, meaning a credit card company can’t come after your assets if you fail to pay what you owe. Since credit card companies don’t have this recourse, many are willing to negotiate a settlement with customers to recoup as much of the debt as possible.

When will debt collectors have to give notice of eviction moratorium?

All debt collectors must follow the Fair Debt Collection Practices Act (FDCPA). This can include lawyers who collect rent for landlords. Starting on May 3, 2021, a debt collector may be required to give you notice about the federal CDC eviction moratorium.

Can you leave originals with a debt collector?

Never leave your originals with anyone. It will be helpful for your attorney to review copies of letters you have received from the debt collector, as well as any copies of records you have kept of phone calls, letters you wrote to the debt collector, or other communications. Read full answer.

What to do if a credit card company sues you?

There’s a sports adage that the best defense is a good offense. If a credit card company sues you, one strategy is to challenge its right to do so. It’s the plaintiffs’ responsibility to prove that you owe them money. Make them do it. Debt often gets sold, so ask for documentation of a credit agreement that you signed and proof that the paperwork is accurate and came from the original creditor. This can be done without a lawyer.

What happens if you default on credit card debt?

Debt has consequences, some of which will surprise the average American. For example, if you default on credit card debt the major consequence could be a lawsuit. Hold on.

What is Incharge debt management?

InCharge has credit counselors who can help reduce your monthly payments and get you out of debt even faster. With a debt management program, counselors can work with the credit card company to reduce the interest rate on your debt to 8% (sometimes better) and arrange a payment schedule that is affordable.

What is the top debt collection problem?

In 2019, the top debt collection problem was being pursued for a debt an individual didn’t owe. People frequently learn of collection efforts only after they are denied a loan or don’t get a job because of an outstanding debt on their credit report. A couple facts are interesting to note.

How many calls can you get from a debt collector?

If you have five debts, that does mean you could get 35 calls – but you’d only have to have five conversations. The second part of the rule says that debt collectors are required to provide consumers a validation notice either immediately or within five days of contacting the person they believe owes the debt.

How much credit card debt will be in 2021?

According to the Federal Reserve, U.S. credit card debt stood at $770 billion in early 2021. Understand, too, that credit card companies don’t sue capriciously. But if you fail to make the minimum monthly payment and carry a high balance, you’re going to get the dreaded phone call or court summons.

What happens if you don't show up for a credit card lawsuit?

If you don’t show up for the court proceeding, the judge automatically rules against you and will order you to pay the full amount. Credit cards are unsecured debt — meaning there’s no collateral at stake, such as a home or car — so the lender has limited options for collection.

What type of debt can you settle?

You can also attempt to settle the following types of debt: Credit card debt. Store card debt. Unpaid medical bills. Unpaid phone bills. The fundamentals, however, are the same regardless of which type of debt settlement program you choose or what type of debt you’re trying to settle.

Why do you need a debt settlement company?

Advantages: A debt settlement company is likely to know which creditors are more inclined to settle and for how much. A debt settlement program will provide you with the discipline to save money every month that you can use as leverage when negotiating.

What is a credit card settlement?

Credit card debt settlement is an agreement between an indebted consumer and a creditor that entails the consumer submitting a lump-sum payment for the majority of what they owe in return for the company that owns the debt forgiving part of the outstanding balance as well as certain fees and finance charges.

How long does a default stay on your credit report?

It’s also important to note that since you are likely to have defaulted on your account prior to reaching a debt settlement agreement, information about the default will remain on your major credit reports for seven years from the date that you became 180 days late. Your credit score will suffer during that timeframe.

How many days behind on credit card payments?

In other words, you have to be around 180 days behind on your credit card payments to even qualify for consideration. With that said, there are two basic types of debt settlement: 1) do it yourself debt settlement; and 2) service-assisted debt settlement. You can also attempt to settle the following types of debt:

How long does it take to settle debt after Chapter 7 bankruptcy?

It's important to note that Chapter 7 bankruptcy can resolve debt problems in 3-6 months, so debt settlement is less favorable in that matchup. When you don't mind damage to credit.

What is debt settlement?

Debt settlement is an amended payment agreement that entails submitting a one-time payment for part of what you owe in return for the creditor/debt collector forgiving the rest. Your account must be in default (or close to it) in order for you to qualify for debt settlement.

What to do if a collection agency is suing you for a credit card?

For example, if a collection agency is suing you for $4,000 related to a credit card account, you should ask for documentation that starts with the opening of your account and ends with the last activity on the account.

How to respond to a debt lawsuit?

One way to respond to a debt lawsuit is to challenge the plaintiff’s right to file the lawsuit. By the time a debt reaches this point, it has often been sold—sometimes more than once. The entity that owns the debt and is pursuing a lawsuit against you is legally required to show proof that they have a right to do so.

How long does it take for a debt collector to validate a summons?

Just a note: Even when your right to validation has been triggered and you send a request with 30 days of receiving the initial communication, debt collectors are not required to validate within 30 days.

What happens if you can't pay your debt?

If you owe a debt and can’t pay it and you’re experiencing other financial distress, bankruptcy might be the right option. When you file a petition of bankruptcy, an automatic stay occurs. That means that all debt collection activity must cease and desist while the bankruptcy is handled.

How many people have dealt with debt collectors?

According to the Consumer Financial Protection Bureau, more than 70 million Americans have dealt with debt collectors, and around 25% felt threatened during their dealings with such agencies. The type of language some collection agencies use can spark fear.

How long can a creditor sue a debtor?

The rules vary by state and even situation, but typically the laws provide a range between four and six years in most cases.

What happens if you miss the deadline for a judgment?

2. Challenge the Company’s Legal Right to Sue.