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Why Defend a Credit Card Collection Action?
The primary reasons to defend credit card collection lawsuits are to avoid involuntarily losing money and property, and harming your credit score. The most common collection method is for the credit card creditor to request the sheriff to freeze and garnish your bank accounts. This is particularly problematic when individuals are using their bank accounts for direct deposit of their paychecks and to pay their mortgages. Instead of the funds going to the mortgage company the credit card creditor intercepts them. Everyone knows that an auto lender can repossess a person's vehicle if they fail to make the monthly payments. This is because the auto lender has a secured interest in the vehicle. Most people, however, do not realize that an unsecured creditor, such as a credit card company that has obtained a judgment can levy (repossess) a vehicle and sell it at auction. Levy means the sheriff will take possession of your vehicle and move it to an impound lot prior to auction. The proceeds from the auction will go toward paying the sheriff's fee, impound fee, and auction fee and the remainder will go to the judgment creditor. Another common technique credit card creditors use to collect on a judgment is to simply wait for the debtor to sell real estate. Normally, a potential buyer will not purchase an individual's home unless they can receive clear title, meaning the seller of real estate must pay off the judgment lien in order to sell his or her home.
This even applies for purchasing real estate. In general, a mortgage company will require that a home loan borrowers clean up any judgments or adverse information on their credit reports prior to issuing a mortgage loan. Most people are not aware that a judgment creditor may execute a judgment by having the sheriff enter your home and take an inventory of your personal possessions and auction them off at your front door step in front of your neighbors. This happens more often than you would think, and if you go to your local magistrate court you will find several door step auction handbills advertised on the wall. Once the Court grants a judgment in favor of the credit card creditor, you can expect debt collectors to send you interrogatories (questionnaires) or schedule a deposition (interview with debt collector). An interrogatory is a questionnaire that you are required to answer by law, which demands that you list all of your assets including bank accounts, real estate, and vehicles. A deposition is similar; however, you must appear in person before opposing counsel and answer their questions under oath and the penalty of perjury.
If you do not complete this questionnaire or attend the interview the Court could sanction (fine) you and hold you in contempt of court. If you continue to ignore these interrogatories and depositions then court will issue a bench warrant for your arrest until you comply. Most people don't realize that you can be arrested for failing to follow court orders in a civil matter.