March 9, 2014
Tips for handling credit card debt
Credit card debt is a serious problem in the United States.
The average American household owes $15,270 on their credit cards, according to Nerdwallet.com, a financial website.
About 130 Erie County residents are currently being sued in Erie County for not paying their credit card balances, said Anthony "Buzz" Andrezeski, a former state senator and an Erie attorney who specializes in consumer law.
"I have seen debt collectors sue people for as little as $524," Andrezeski said.
If you have significant credit card debt, the Federal Trade Commission reports there are steps you can take to prevent getting sued. They include:
Developing a budget. Assess how much money you earn or receive each month, and how much you spend.
List your income from all sources, then your fixed expenses -- like rent and car payments -- and expenses that vary -- like groceries and clothing. Writing down this information can help you see areas where you can cut costs and put that money toward your credit card debt.
Contacting your creditor. If you are in financial trouble, call your creditors. Tell them what is happening and try to work out a modified payment plan.
Don't wait until your account has been turned over to a debt collector.
Hiring a debt relief service. If you can't work out a payment plan with your creditor, you might consider a credit counselor or debt settlement service.
Before you do business with any of these companies, first check them out with the Pennsylvania Attorney General's Office (www.attorneygeneral.gov) and Better Business Bureau (www.bbb.org).
Find out what services a particular company provides, how much it charges and how long it takes to get the results you want. Be wary of any company that charges upfront fees, guarantees it can make your unsecured debt go away, or touts a new government program that bails out credit card debt.
Don't panic if you already have been sued for credit card debt, Andrezeski said. He offered several tips for dealing with such a lawsuit.
Hire an attorney, if you can afford one. Most people who are sued for credit card debt represent themselves because they can't afford an attorney, Andrezeski said.
"The debt collector has an attorney, my advice is that you should have one, too," Andrezeski said.
Make sure the debt collector has a signed contract. Many collectors show up to court with just a billing statement, Andrezeski said.
"I can print out a statement that has your name on it," Andrezeski said. "It's not the same as a contract with your signature on it."
Prove the collector owns your debt. They should have a piece of paper that references your name, account number and the date when they purchased your debt, Andrezeski said.
"Some of these collectors buy thousands and thousands of contracts at a time," Andrezeski said. "Too many times they don't have the signed agreement or any documents that prove they own your debt. All they have is a couple of statements. That's not enough."