Lately there’s been some talk that unsecured creditors—primarily of credit card debt—are more aggressively enforcing their claims. And to the trained ear of an experienced New York bankruptcy attorney, the word “aggressive” used in connection with creditor actions can often signal the word “illegal.”
One trick we’ve been hearing about is taking people’s cars and then selling them to satisfy credit card debt. They don’t have any claim to the car, so how can they get away with this?
This particular scheme requires the debtor to fall behind or default on his or her credit card bills. When this happens, banks sue you. They mail you a summons hoping you’ll ignore it, which is the real trick. Then they appear in court, and because you are not present to answer the suit, the courts automatically rule in their favor. A default judgment against you is a difficult situation to escape. Then the creditor begins to do anything it can to collect on the default judgment … including asking the court’s permission to take your car.
Here’s what you can do to prevent this from happening:
First, read all mail from your creditors, no matter how “aggressive” they are.
Second, respond to all lawsuits, and find an experienced bankruptcy attorney to discuss all your options.
Third, appear at court or serve an answer on the bank and file it with the court. Do not let the bank obtain a default judgment.
Finally, if you do have a default judgment against you, all is not necessarily lost. You can still require the creditor to prove that it owns the debt. Why? Often when debtors default on a loan, banks will bundle them and sell them to collection agencies. These bundles can include enormous numbers of loans, and collection agencies don’t always look through them or keep them organized. If you challenge them to show that it owns the loan and it doesn’t, then it does not have the standing to collect on your loan.
Debt collection is a big business, but it’s important for debtors to know all their options if they are having trouble making payments. An experienced New York bankruptcy attorney can advise you, even if it requires filing a Chapter 7 bankruptcy.
For more questions about credit card debt, collectors, bankruptcy, the automatic stay and effective strategies for dealing with foreclosure, please feel free to contact experienced New York bankruptcy attorney Bruce Weiner for a free initial consultation.
