Credit Card Debt
It is incredibly easy for American consumers to rack up credit card debt. In fact, roughly 37% of all credit card holders in the U.S. regularly carry unpaid credit card debt. Unfortunately, credit card debt is not nearly as easy to pay off as it is to accrue, especially for those carrying anywhere near the $7,938 in credit card debt American households carry on average. Unfortunately, many Americans with credit card debt also have a mortgage, car loans and other payments to keep up with, which can make an already difficult financial situation even more challenging. If you have more credit card debt than you can afford to pay back, or if your rights have been violated by a ruthless credit card debt collector, do not hesitate to seek legal advice from a reputable Los Angeles credit card debt attorney. You likely have options for putting a stop to credit harassment and may even be able to eliminate the credit card debt once and for all by negotiating a debt settlement, filing for bankruptcy or taking some other legal action. Figuring out what to do about your credit card debt can be paralyzing, but the absolute worst thing you can do is nothing. You can start by contacting our team of experts at ibankruptcyattorneys.com to discuss your legal options.
Experienced Credit Card Debt Attorneys in Los Angeles
Of all the different types of consumer debt, credit card debt may seem like the least distressing. Compared to a mortgage loan, which is collateralized by your home, and an auto loan, which is collateralized by your car, credit card debt is an unsecured debt, which means you didn’t put up any of your property as collateral. However, that does not mean credit card debt isn’t a big deal. Sure, you may be more worried about staying current on your home and car payment than you are about paying your credit card bill, but if you fall behind on your credit card payments, interest will simply continue to accrue, putting you further and further in debt with what may seem like no way out. Defaulting on credit card debt can also damage your credit score and make it harder for you to qualify for credit in the future. The credit card company may even initiate a lawsuit against you to collect the amount that is owed.
There are many advantages to hiring an attorney who specializes in bankruptcy law to help you settle or eliminate your credit card debt. Among them is an attorney’s ability to pursue legal remedies to stop creditor harassment and collection actions, defend you in lawsuits, sue debt collectors or credit card companies that violate your rights, and recommend the best course of action based on your unique circumstances. Most importantly, the attorney you hire has an obligation to protect your rights and represent your best interests, regardless of your situation. Your attorney is your most trusted legal advocate and when it comes to finding the debt-relief solution that is right for you, there is no substitute for a knowledgeable, compassionate attorney committed to helping individuals and businesses in California deal with debt. Contact ibankruptcyattorneys.com as soon as possible to find out how we can assist you.
Credit Card Debt in California
Credit card debt is one of the most common types of consumer debt in the United States and is one form of debt that is typically pursued by debt collectors. Americans as a whole rely heavily on credit cards and incur substantial credit card debt, and Californians are no exception. California residents have the fourth highest credit card debt on average in the United States, at nearly $9,500 per household. The good news is Americans are making great efforts to pay down their credit card debt in 2020, and Californians are the ones leading the charge. According to a new WalletHub study, U.S. consumers started off 2020 owing more than $1 trillion in credit card debt, a record high. However, during the first quarter of the year, consumers reduced that debt by a whopping $60 billion, and during the second quarter, they reduced it further, slashing that number by another $58 billion. Based on their findings, the authors of the WalletHub study project that U.S. consumers “will end the year with a slight reduction in credit card debt for the first time since the end of the Great Recession in 2009.”
California Consumer Protection Laws
In the United States, there are federal laws in place that offer important protections for consumers in matters concerning consumer debt, or debt that is incurred “primarily for personal, family, or household purposes” (15 U.S.C. §1692a(5)). Fortunately for California residents, the state of California has passed several of its own laws that expand upon those rights and protections and offer additional safeguards for its residents. Some of these laws are specific to California, while others work in conjunction with federal laws or enhance existing federal consumer protections. For instance, the California Rosenthal Fair Debt Collection Practices Act is a state law that expands upon the federal Fair Debt Collection Practices Act, placing strict limits on the types of actions creditors and debt collection agencies can employ in an attempt to collect payments from debtors.
Statute of Limitations on Credit Card Debt
There are also state laws in California that put a cap on the amount of time creditors have to attempt to collect past-due debts, known as a statute of limitations. For debts taken on via an oral contract, the statute of limitations in California is two years. For all other debts, the statute of limitations is four years, with the exception of state tax debt, which can be pursued for 20 years. What does this mean exactly? For most unsecured debts, like credit card debt, it is against the law for creditors to attempt to collect debts that are more than four years past due. Unfortunately, not all creditors comply with this law, which is why it is imperative that you know your own rights as a consumer.
Refusing to Pay Your Credit Card Bill
Although entering into a contract with a credit card company means you are agreeing to pay back any credit card debts you incur, both state and federal consumer protection laws have provisions in place that give consumers the right to refuse to pay a credit card bill in certain specific situations. One such situation is when there is a billing error on your credit card bill. If there is an unauthorized charge or a charge for goods or services that were not delivered, you have 60 days to send a letter to your credit card company explaining the error. Even if you have already paid the bill in question, you can still claim a billing error, and you may be eligible for a refund. You can also refuse to pay your credit card bill if you have a dispute with the business or merchant that charged your card. This is called a “claims and defenses” dispute and it only applies if there is a billing error of more than $50, the business is located in California and within 100 miles of your home, and you have already made an effort to obtain a refund from the business. You have one year to pursue a claims and defenses dispute.
Ways to Get Rid of Credit Card Debt
With credit card debt at an all-time high in the United States, more and more consumers are struggling to keep up with their monthly payments and are falling into delinquency. According to a 2020 report from the Federal Reserve, delinquencies, or past due payments, are on the rise among young people in particular. In fact, nearly 10% of 18- to 29-year-olds have current credit card debt that is more than 90 days past due, the Federal Reserve report states. If you default on credit card debt, meaning you have fallen behind on your credit card payments and become delinquent, your creditor has the right to take certain action in an attempt to collect payment from you. Usually, the credit card company will transfer your debt to a debt collection agency, which means you can expect relentless phone calls demanding immediate payment. In addition to credit harassment, there are a number of other negative actions you may face in connection with credit card debts you are unable to pay, such as wage garnishment, repossession or possibly even a debt collection lawsuit. Fortunately, if you are burdened by credit card debt that you can’t afford to pay, you have some options for paying off or getting rid of the debt.
Negotiating a Debt Settlement
The first debt-relief option you may want to consider is attempting to negotiate a debt settlement with your creditor for a lesser amount than the full balance on your credit card, usually a range of about 50-70% of the total debt. Not all creditors are amenable to a debt settlement, as it means they are accepting a lower payment than what they are owed. However, some creditors will see that as a more favorable alternative to continuing to pursue you for payments you can’t afford to make. Some creditors may be more understanding if you can provide a reason for the default on your credit card, such as job loss or an unforeseen illness.
Filing for Bankruptcy
Another possible option is filing for bankruptcy. Credit card debts are unsecured debts, meaning the credit was not secured with any collateral, such as a home (secured mortgage loan) or car (secured auto loan). If you are struggling under the weight of overwhelming credit card debt, one way you can rid yourself of the debt is to file for bankruptcy. In addition to allowing debtors to rid themselves of crippling debt, bankruptcy also offers the significant protection of the automatic stay, which puts an immediate stop to efforts by creditors and debt collection agencies to collect payments on credit card debt and other debts. This includes wage garnishment, debt collection lawsuits, repossession and foreclosure proceedings.
In a Chapter 7 bankruptcy, also known as a liquidation, a bankruptcy trustee liquidates your nonexempt assets and uses the proceeds from the sale of the assets to repay your creditors. Whatever unsecured debts remain after this process will be discharged or wiped out, meaning you are no longer legally responsible for paying the debts. Chapter 7 bankruptcy is a good debt-relief solution for debtors with few assets and significant debts who want to discharge their credit card debt and other unsecured debts.
Chapter 13 bankruptcy, also known as a reorganization, is generally more appropriate for debtors with a regular income who want to have more control over which assets are protected in bankruptcy. During the Chapter 13 bankruptcy process, the debtor proposes a three- to five-year repayment plan to repay all or a portion of their debt over time. Once the repayment plan is completed, whatever unsecured debts are left will be discharged.
Bankruptcy isn’t for everyone, but it may be the best solution for debtors who have significant unsecured debts and don’t see a way out from under those debts given their current income and expenses. Bankruptcy does not get rid of secured debts, like mortgage or auto loans, unless you are willing to surrender those assets, but it can help relieve you of some, if not all, of your unsecured debts so you are in a better position to continue making payments on your secured debts.
Consult Our Los Angeles Credit Card Debt Attorneys Today
If you find yourself grappling with crushing credit card debt, we recommend consulting a competent and credible attorney who can walk you through your legal options and explain in detail the benefits and pitfalls of each debt-relief solution available to you. With an experienced attorney on your side, you are better prepared to deal with relentless creditors, take control of your debt and get yourself on more solid ground in terms of your financial situation. For more information about how to eliminate credit card debt or file for bankruptcy protection under Chapter 7 or Chapter 13 in California, contact our Los Angeles credit card debt lawyers at ibankruptcyattorneys.com today to schedule a free initial consultation.