Credit Card Debt Recovery Laws

Written by ciele edwards
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Credit Card Debt Recovery Laws

Credit card debt is unsecured debt. If a borrower ceases to make his scheduled payments, the credit card company cannot claim any of his personal property in lieu of those payments. The creditor, however, has a legal right to the debt and will exercise all reasonable options in an attempt to recover it.


If your credit card debt defaults, your account will be turned over to a collection agency for recovery. All collection agencies are bound by the regulations set forth in the Fair Debt Collection Practices Act (FDCPA). The collection agency may call you about the debt, but only between the hours of 8 a.m. and 9 p.m. and never to the point of harassment. If you request in writing that you not be contacted, the collection agency must oblige. Other permissible debt recovery actions are sending letters about the debt, reporting the debt to your credit report and filing a lawsuit against you for the debt. No debt collector is ever permitted to threaten you or use profanity during collection efforts.


Any creditor to whom you owe a debt or who claims you owe a debt, may legally file a lawsuit to recover the debt. If you fail to respond to the court summons and do not appear in court, a default judgment may be levied against you. The burden of proof in debt recovery cases rests on the plaintiff unless the debtor fails to appear. If this occurs, the plaintiff wins the case by default. Depending on your state's laws, a default judgment may give your creditor permission to garnish your wages and your bank account.

Statute of Limitations

Every state has a statute of limitations (SOL) for debt related lawsuits. The SOL for most states is around three to five years. If the SOL on a debt has expired, the debt is no longer legally recoverable provided the court is aware of the debt's expiration. Although an expired SOL grants you are an airtight defence in court, you will still end up with a default judgment if you fail to appear and present your defence.


The FDCPA grants every consumer the right to debt validation, a process in which the consumer requests proof in writing that he owes the debt. All debt recovery efforts must cease until the consumer is provided with sufficient validation of the debt. If validation of the debt cannot be provided, debt recovery efforts must cease permanently. If the debt currently appears on the consumer's credit report, it must be removed. Debt recovery efforts may legally resume if at any point in the future the creditor is able to provide the consumer with legitimate validation of the debt.


If, during the process of debt recovery, any FDCPA laws are violated, the consumer may file a lawsuit for damages. A common reason for a lawsuit is the debt collector has been unable to validate the debt, yet the debt's appearance on the consumer's credit report has caused him to be turned down for credit, or caused an increase in the interest rates of the debts he currently pays. Upon proving the damages suffered, he may recover the monetary value of his losses through the court. Any additional violations that can be proven, such as harassment or the use of threats, entitle the consumer to receive punitive damages of up to £650. Punitive damages may not exceed £650, even if numerous violations were committed.

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