How to Deal with the Economic Crisis

There is a credit and economic crisis in the United States and the chances that Congress will bail you out, and stop creditors from suing you are pretty small. There are some techniques to consider if you are sued or threatened by a credit card issuer.

First and foremost, get an attorney's advice. If you had severe chest pains, you wouldn't call your Aunt Sadie or the check out lady at the supermarket or your closest friend in the whole entire world, your hairdresser, to perform open heart surgery. Second, the discussion that follows is general and based, primarily, on Florida statutes and law. Nothing is a substitute for the personal advice of a local attorney, familiar with your entire situation and the particular laws of your jurisdiction.

As a result of the credit problems and the poor economy, more and more creditors are suing or threatening to sue folks with balances due on credit cards. If you are sued because of a failure to pay a credit card bill or a car loan or, worst of all, your mortgage, there are some practical things that should be considered.

Most of the time, if a debt is owed to a credit card issuer or a department store, the creditor will not sue. There will be nasty letters, suggestions that your credit will be irreparably destroyed and several letters; you may get telephone calls - but that's probably all. It costs the creditor too much to sue, unless the amount is huge and there is a good likelihood that you really could pay the debt if you really wanted to.

Instead, the bank or store will likely "write off" the debt and, while that action is reported to the credit bureaus, nothing may happen for months or even a year or two. Sooner or later, the creditor will bundle up a bunch of these claims and sell them to a collection agency which specializes in collection. Here's the catch. The original claim may have been $750, interest and late charges may make the total $1500; the creditor sells the claim for something like $40 or $50, hoping for a big profit and if you pay the $1500, the agency has done very well indeed!

So, you may be able to settle the $1500 claim for $100 or less!