Using a Bankruptcy Lawyer to Negotiate Credit Card Debt

Millions of Americans are struggling with credit card debt.  Many of these people make the mistake of ignoring the problem which could be disastrous.  Some credit card companies may write off defaulted credit card debt as bad debt. However, this rarely happens.  Credit card issuers have become very aggressive and usually pursue all legal means (and some illegal means) of collecting credit cards debt.  If all other collection efforts fail, many credit card issuers will file a lawsuit against a consumer who has defaulted on a credit card.

What Happens If A Credit Card Issuer Sues?

If a credit card company sues and wins, a judgment will be entered in its favor.  A judgment is a lien against all of the consumer's property and gives the credit card issuer the right to levy against that property, including bank accounts.  Additionally, the credit card issuer has the right to garnish the consumer's wages. 

Once a judgment is entered, interest begins to accrue on the amount awarded to the credit card issuer.  Interest will continue to accrue until the judgment has been paid in full, often doubling or tripling the debt by the time it is paid off.  Moreover, the consumer is also responsible for paying the attorney's fees and court costs of the credit card issuer.

Can A Bankruptcy Attorney Help Negotiate Credit Card Debt?

Having a bankruptcy attorney negotiate with credit card issuers is a great strategy because of the leverage the threat of bankruptcy creates.  Credit card issuers know that they will get nothing if a consumer files Chapter 7 bankruptcy and may get little or nothing if he files a Chapter 13 case.  Because they are in the business of making money, most credit card issuers will negotiate in the hopes of getting something rather than face the prospect of getting nothing if the debtor files bankruptcy.

Bankruptcy attorneys can also use various laws against credit card companies as further leverage to get them to accept a negotiated settlement.  Oftentimes, credit card issuers violate the law to the detriment of the consumer.  Some of the most common violations are:

• Fair Debt Collection Practices Act (FDCPA) violations;
• Fair Credit Reporting Act (FCRA) violations;
• Consumer Credit Protection Act (CCPA) violations; and
• State consumer protection law violations.

A successful negotiation, often referred to as a voluntary repayment agreement, may result in lower a lower interest rate and/or a reduction in the principal balance owed on the credit card.  In some instances, the credit card company may even agree to suspend the accrual of interest and remove the negative the payment history reported to the credit bureaus as long as payments are being made pursuant to the terms of the repayment agreement.

Getting Legal Help

Credit card companies and collection agencies often use strong arm tactics and illegal methods to intimidate consumers with financial problems into repaying debts they simply cannot afford to repay.  An experienced bankruptcy attorney may be able to negotiate a settlement with a credit card issuer by using the threat of bankruptcy as leverage.  A qualified bankruptcy attorney will assist a consumer in drafting a reasonable settlement request, presenting it to the credit card issuer, and negotiating a final agreement that works for the consumer.