Call Us: 954-859-6662
Call Us: 954-859-6662

Credit Card Debt

How do I deal with credit card debt?

Once you are paying less than full payments on your credit card, you are in trouble.  Interest is so high on credit card debt that when you are making minimum payments on the credit card, you are barely paying any principle, if any.  If you get so behind on your credit card debt, many credit card companies can do several things.  If you have a bank account held by the same institution that you owe the money to on the credit card debt, any money in any account you own at that financial institution can just be taken by the credit card company.  This is called a setoff.  When you opened the account at the bank, you signed a form allowing the financial institution to release the money you have on account to the credit card company if they request it.  So it’s not a good idea to have a bank account at a financial institution when you have a credit card from the same financial institution.  Another option for the credit card company is to file a lawsuit against you to collect any money you owe them.  They will also ask for attorney fees and costs for the filing of the lawsuit.  That can add up to several hundreds of dollars.  There are not many defenses to a lawsuit by a credit card company for your failure to pay.  However, the statute of limitations, which prevents the court from entering a judgment against you is a valid defense if the last payment on the debt was more than five years prior to the lawsuit being filed.  But, the statute of limitations defense must be raised in the lawsuit or it is waived.  So, if you get sued, you either need the advice of a lawyer, or you can hire a defense attorney to represent you.  Unless you have a real defense, it’s unlikely that you will be successful in the state court lawsuit.  If a judgment is entered against you, nothing has really changed.  A judgment is the same as the original debt that you owed before you got sued, except for the amount, it’s just another way of saying you owe the same money.  However, once a judgment is entered, the credit card company can do several things.  The first thing they will try to do is to get information from you about your assets and where they are.  They may be able to garnish your wages, or take your car, or garnish your bank account.  Even if you have defenses to the credit card company taking your assets, those assets may be frozen until a court decides whether your assets are exempt from collection from creditors.  That could take a while.  Meanwhile, you may have checks that bounce, or you may not have access to your car or 25% of take home wages may be frozen until the court rules whether these assets are exempt.  A garnishment is when the judgment creditor sues your employer to see how much money you are making, and how often you get paid.  It also demands that your employer withhold 25% of your take home money to be put into a separate account until a court determines if they have the right to that money.  If you file for bankruptcy, that money will immediately be returned to you.  If they have levied a bank account or a car, that also gets immediately returned.  This will happen whether you file a Chapter 7 or a Chapter 13.  All bankruptcy chapters have a provision that once the bankruptcy is filed, no creditor can do anything to attempt to collect a debt. 

What does bankruptcy do for credit card debt?

Chapter 7 bankruptcy eliminates credit card debt.  You must first be able to qualify for Chapter 7 bankruptcy relief.  If you do qualify to file for Chapter 7 bankruptcy, and you do file for Chapter 7 bankruptcy relief, debt collectors must stop any and all efforts to collect on the debt.  No phone calls, no letters, no lawsuits and all other collection activities must stop.  If you don’t qualify for chapter 7 bankruptcy relief or if you have other debt that needs to be dealt with, like a mortgage arrearage, IRS debt, child support or alimony or a vehicle payment that is too high, you may be able to file a Chapter 13 bankruptcy.  A Chapter 13 bankruptcy may eliminate most of your credit card debt while allowing you to deal with more important debts like your mortgage, car or IRS.  No matter which bankruptcy you file, credit card debt will be mostly if not totally wiped out.

A garnishment is when a creditor gets a court order that if there is an asset that someone is holding on your behalf, that person or entity must keep holding that asset until further order of the court.  When wages are garnished, your employer will get sued and have 20 days to respond.  They must tell the creditor how much you are getting paid and how often.  The employer must also tell the creditor how much the employer is withholding for taxes, insurance and retirement, if any.  The court will order that the creditor withhold 25% of the balance due to you as garnished wages until the court can determine whether those wages are exempt or can be given to the creditor.

Wages are exempt if you are the head of a household with dependents.  A dependent is anyone who receives at least 50% of their income for you.  So if a parent or even a stranger gets 50% or more of their income from you, they are a dependent and your wages are exempt.  The way this is proved is from your tax returns.  If you list this person as a dependent on your returns, that’s proof that they are your dependent.  All of this is defined by Florida Statute section 222.11.

When there is a judgment against you, the credit card company or any other creditor can have the sheriff take an asset of yours.  This includes a car or a bank account.  Once an asset is levied, you can object to the levy by going to the court and claiming the asset to be exempt.  Most exemptions are defined by Florida Statutes section 222, and the Florida Constitution.  There are other exemptions statutes, but these are the main one’s.

Once the bankruptcy is filed, the assets that were taken or that are being held must immediately be returned.  Any claims of exemption can be made in the bankruptcy court. 

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