Being sued by a credit card company can be a distressing experience, often with long lasting consequences. Just being threatened with legal action can be a cause of great anxiety, even if you are not sure whether the credit card company actually intends to carry out the threat or not. It is safe to say that most companies who are owed many may well threaten to take you to court, even if they have no intention of doing so. It is just another weapon in the financial recovery arsenal.
If you are at the stage where you are being sued for debt, the first thing you must do is take legal advice. If you have a summons to attend court, you must attend, as the case will go ahead whether you are there are not, and the case against you will be upheld if you are not there. Do not worry about being sent to prison, that cannot happen if this is the first time you have been sued for a debt.
If the case goes against you the worst that is likely to happen is that you will be ordered to pay back the money you owe at a rate set by the court. They will examine your finances and make a decision about what they believe is an affordable rate at which to pay it back. Once this has happened and there is a court order against you, it is very important to stick to the terms of the order. If you do not, there are more serious legal consequences that the credit card company can then try to use against you.
If you have not got as far as actually receiving a summons, it is not too late to take steps to address your debts and prevent legal action. The worst thing you can do is ignore the situation, because then the credit card company might assume you can afford to pay up but are just choosing not to. You need to let the credit card companies know that you take the situation seriously, that you are in genuine hardship, but also that you are doing something to address the problem.
The best ways to tackle debt and prevent being sued by a credit card company are to set up a debt payment plan. This way you get your creditors on board because they can see that you will be making regular payments and they know when the debt will be paid off. The most usual approach is to use a debt management plan to consolidate all your debts into a single payment. For this type of plan your debts need to be to more than one company, and they are ideal for credit card debts, personal loans and other unsecured debts.
You need to have a steady income to be able to afford the monthly payments on a debt management plan, but if your situation is really serious, you might need to consider debt settlement instead. You still have to make a regular monthly payment towards your debts, but it tends to be less, because the debt settlement process depends on getting a large percentage of your debts written off by the credit card company. You make regular payments into a separate pot instead of paying anything direct to your creditors, then as the debt settlement company reach agreements to settle a debt, you use the money to pay it off. It is not unusual to get up to 60% of your credit card debts written off.
If you do want to look into debt management or debt settlement, you must find a good company to advise you and set up this arrangement for you. We have all heard horror stories about debt companies that take money from people and leave them worse off, but this is entirely avoidable if you just take some precautions about finding an ethical company to work with.
You can safeguard yourself by following recommendations for only those companies that are known to be very well established. If you stick to companies that have been around a while and which have lots of satisfied, debt free customers, you will be OK. As a final safeguard it is a good idea to apply to about three companies so that you can then make a judgement about which is best for you.