If you default on credit card debt typically your credit line will be cancelled if the default is not promptly cured. Usually your account will be turned over to the internal collection department of the creditor. They will call you (frequently — often daily if not more) and send you letters about the past due debt. They may offer you a discount for a single lump sum payment or payment of an agreed reduced amount in 2-3 payments (perhaps longer).
The next stage is that the debt will get turned over to an outside debt collection agency. This is a company that specializes in collecting past due debts. They usually have a stable of collectors who are employed on a primarily contingency basis — meaning the collector’s salary is directly tied to his or her ability to collect money from you.. Many collection agencies — particularly in New York employ what has become to be know as the “Buffalo” style of collections (named after the collections agencies in that city that often utilize this style). The Buffalo style of collections is very aggressive and confrontational. Even if an individual collector does not engage in blatant violations of the Fair Debt Collections Practice Act (FDCPA) by engaging in prohibited debt collection activities — they often will create an artificial atmosphere of fear, uncertainty and urgency. For example, it would be a clear violation of FDCPA for a debtor collector to state “If you don’t pay this debt you will go to jail” — since that statement is false (we have not had debtors prison in the U.S. since the 1800s). However, a Buffalo style collector may intimate unspecified dire consequences intended to elicit fear and anxiety in the debtor, such as “I wouldn’t want to be in your shoes if you don’t pay this debt by the end of the month.” When the debtor inquires what will happen the collector might respond vaguely, such as “It’s not good” or “You’ll fine out if you don’t pay.”
The next stage if a debtor does not make arrangements with a collection agency to satisfy the debt is that the claim will get sent to a collections law firm to file a lawsuit against you. If you live in New York City this will be brought in the New York Civil Court if the claim is under $25,000 or in the New York Supreme Court if the claim is above $25,000,
If the creditor gets a judgment the creditor’s attorneys can seek to enforce that judgment against any non-exempt assets that you may have and garnish your wages.
A personal bankruptcy filing will eliminate collection activity, collection lawsuit, and judgment enforcement. Most collection related judgments are wiped out in bankruptcy.
Please feel free to visit the Frequently Asked Questions (FAQs) and Blog postings on our website at www.starrandstarr.com for further information.