We discuss the legal consequences if you stop paying your credit cards; why ignoring your debt is the worst thing you can possibly do.
If you stop paying your credit cards, it is possible, but
highly unlikely if you have a lot of unsecured debt(e.g. credit card, medical
bills, collection/charge-offs).
Creditors and debt collectors of unsecured debt do have a
right to pursue legal action to collect an unpaid debt.
However, it's a big risk to sue a debtor that has defaulted. Therefore, the
vast majority of debt collectors would prefer to settle, rather than sue. The
cost of suing is usually greater than the amount that the debtor owes the
creditor. Besides, even if the debt collector wins a judgment in court, and the
debtor has little or no assets, how can the debt collector collect?
If
You Have a Substantial Amount of Assets, Stop Paying Your Credit Cards Is Not
Recommended
If your creditors believe that you possess a significant
amount of assets (e.g. cash, stocks, bonds, equity in a property, etc.), they
may pursue legal action. However, if you don't have many assets, or a large
savings account, it's unlikely that debt collectors will sue.
They may serve a debtor with a summons to appear in court, but that's usually a
scare tactic in order to get the debtor to pay the unpaid debt. Even if the
debt collector follows through with the lawsuit, the debtor may negotiate a
payment plan or a settlement with the creditor before the court date.
The
Gamble Creditors Must Take To Sue
If debt collectors exercise their
option to sue, here's the process that they typically follow:
- Perform an asset investigation. This is an inquiry that
determines the approximate value of a debtor's assets.
- Hire an attorney to represent the debt collector.
- Pay required court fees.
- Obtain a judgment from the court.
- Worry about the debtor selling his/her assets and
emptying his/her bank accounts in order not to pay the judgment amount.
- Even if the debt collector obtains a judgment, there is
no guarantee that the creditors will ever get paid. You can't force
someone to pay a delinquent debt if he doesn't have the funds.
Due to the
above pitfalls, the vast majority of creditors would much rather settle than
sue. They are like any other "for profit" business. It's usually more
profitable for them to accept a settlement offer.
Therefore, stop paying your credit cards may
be an effective strategy for those that are distressed.
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| About the author |
Debt Free Solutions is a financial consulting company that assists Americans across the U.S. to eliminate their credit card and other unsecured debt (e.g. medical bills, collection accounts).
We utilize various programs and strategies to assist them to get rid of their debt in the quickest, most efficient method possible. We also analyze the risk factor. We structure our programs to drastically minimize the risk that is inevitable with all debt elimination programs.
We offer our clients much more than a debt settlement company does. The vast majority of debt negotiation companies simply help you settle your debts with your creditors- nothing more.
On the other hand, we provide additional services to significantly help to minimize the risks that are involved with negotiating with your creditors.
First, we offer a free, no-risk 10 day trial service. If, for any reason, you are not completely satisfied, you simply walk away. No commitments. No contracts.
Next, we provide a comprehensive credit repair service to all our clients. This is a $795 service that is absolutely free!
Also, we offer free attorney consultation (a maximum of five sessions) in case one of our clients’ creditors files a lawsuit.
Last, we provide a written guarantee that our clients’ creditors will settle for an average of 50% or more for all of the debts they attempt to negotiate.
Our services are competitively priced- and include the above services!
So, what is the best way to get out of debt? By knowing your options that list the pro's and con's of each program or strategy. Choosing a program without knowing the benefits and risks may cost you $1,000's!
debt free solutions |
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