Collection Agency Threatens To Sue For Unsecured Credit Card Debt

Category: Bankruptcy Q&A Comment (1)

Question: My husband and I have gotten into trouble with credit. We have 4 unsecured credit cards (including department store credit cards) and they have been sent to collection. The problem is that some of them are threatening to sue. We pay a mortgage and have 2 car loans, all of which are up to date never missed or late payment.

Credit Card DebtThe cards are all unsecured so can they actually sue me and take my house, car or garnish my wages? Until 2 years ago everything was great, then one thing after another and things not in our control started to go wrong – our financial situation just got too bad. Now I make payments when we have money, but most of the time after paying our mortgages, car loan and groceries we just don’t have the money. What should we do?

Dealing With Unsecured Credit Card Debt

If you are unable to make payments on your credit cards it is possible for the credit card companies to sue you and garnishee your wages. Obviously you don’t want that to happen, so we recommend that you be proactive and choose a strategy to deal with your debts.

To start, make a monthly budget and determine if it’s possible to reduce your expenses, or increase your income. You want to free up cash to allow you to make extra payments on your credit cards. If it is possible, make the minimum payments on all cards, and pay extra on the highest interest rate cards to get them paid off first.

If that’s not possible, you and your spouse should consider a consumer proposal. It may be possible to work out a plan to pay a portion of what you owe. In most cases credit card companies will accept a reasonable proposal. Since you own a home, it is important that you ask a trustee about a consumer proposal especially if you have equity in your home since by filing a consumer proposal you may be able to keep your house.  How much equity you have in your home will of course affect how much you will have to offer your creditors in your proposal, along with other factors like how much income you make.

The final option is bankruptcy, and should only be considered if all other options are not possible. Bankruptcy will eliminate your credit card debts, but it may impact your home, so you will want to meet with a licensed bankruptcy trustee to review your options in detail before deciding on the final option.

If your credit card debt is too high, contact a bankruptcy trustee today for help eliminating your debts.

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