Worried About Getting Sued Over Credit Card Debt?

Credit card debt can sneak up on you. You miss a payment or make a couple of late payments, and before you know it, your minimum monthly payments add up to several hundred dollars a month and your creditors are threatening to sue you over credit card debt.

Credit card holders who are afraid they are going to get sued over their credit card debt have at least three alternatives available to them: they can declare bankruptcy, they can use a credit counseling service, or they can reduce their credit card debt by cutting back on expenses and applying the savings to their balances.

Is Bankruptcy For You?

If your credit card debt is overwhelming and your circumstances make it virtually impossible for you to repay the debt, bankruptcy may be an option for you. Consult with an attorney specializing in bankruptcy to find out if filing bankruptcy would reduce or eliminate you credit card debt. At a minimum, filing for bankruptcy may fend off a creditor who is threatening to sue you over credit card debt. Filing for bankruptcy may also buy you some additional time to pay off your credit card debt by allowing you to restructure all your debts and reestablishing the minimum amount you pay to each creditor.

Bankruptcy is a drastic step that can have a negative impact on your credit rating for many years to come. You should not consider declaring bankruptcy until you have consulted a bankruptcy attorney and carefully weighed all your other options. Explore all your options!

Is Credit Counseling For You?

If you are concerned that you may be sued over credit card debt, one alternative to bankruptcy is to consult a credit counseling service. A counseling service will assess your income and your debts and approach your creditors on your behalf to make alternative payment arrangements. You make one monthly payment to the credit counselor, and the credit counseling service pays your creditors for you, per the agreement they made for you.

Making payments through a counseling agency may mean that your credit report reflects late or delinquent payments; however, these ratings are not as detrimental to your credit and do not last as long as filing for bankruptcy.

Cutting Back On Expenses

Before you consult a bankruptcy attorney or a credit card counseling service, make an honest assessment of your monthly expenses and see what you can cut back on. If you are making a car payment, consider whether you could do without a car for a year or so. By applying you monthly car payment and auto insurance premiums to your credit card bills, you can substantially reduce your credit card debt in a relatively short period of time.

Communicate with your creditors. If they know you are serious about not getting sued over credit card debt, and that you are willing to sacrifice your personal convenience by giving up your car for a year to pay your credit cards off, they are more likely to work with you than to sue you over credit card debt.

For credit card information please visit Reduce Credit Card Debt
John Stevenson holds an MBA in Finance from the Simon School of Business.
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