Can Credit Card Companies Sue You

Can Credit Card Companies Sue You – Angry at your credit card company? Even though many financial institutions have arbitration clauses that prevent you from suing, surprisingly you can still sue most credit card companies.

Consumers’ ability to sue financial institutions has been challenged this year after President Donald Trump killed rules proposed by the Consumer Financial Protection Bureau. The agreement protects consumers from suing the company and forces them to settle disputes out of court through arbitration. Companies primarily use them to prevent class action suits, but they also prevent consumers from suing individually.

Can Credit Card Companies Sue You

However, according to a new analysis by credit card comparison site CreditCards.com, even though companies have the ability to use these provisions, many credit card companies do not.

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They studied 30 major credit card issuers and found that only nine had binding arbitration clauses in their contracts. The remaining 21 either have no mandatory arbitration clause or allow consumers to opt-out within a specified period.

“We’re pleased that consumers ultimately have more options than we expected from these mandatory arbitration clauses,” said Matt Schulz, senior industry analyst at CreditCards.com.

“It’s probably an indication of the competitive nature of the credit card market,” he said. “They don’t want to introduce terms that they don’t see as consumer friendly.”

Bank of America BAC, +2.23% , Chase JPM, +0.26% and Capital One COF, +0.61% are three of the largest card issuers without arbitration clauses, CreditCards.com found.

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That same year, Minnesota’s attorney general filed a lawsuit against an organization that handles disputes between credit card issuers and cardholders.

In response, the organization agreed to stop accepting new cases from financial institutions, phone companies and health care organizations.

Later in 2009, the American Arbitration Association, a trade group, announced it would end consumer debt collection practices after meeting with a US House subcommittee.

Pursuit, Bank of America and Capital One have all begun to terminate their contractual arbitration agreements and have not reinstated them.

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“It’s probably an indicator that other big banks either don’t think it’s important or don’t think it’s worth the effort,” Schulz said.

American Express AXP, -0.13% , Citibank C, +1.89% and Discovery DFS, +0.27% are among the agencies that allow consumers to opt out of the clause. CreditCards.com found that consumers typically wait 30 to 60 days after a card is issued.

“Wells Fargo’s mission is to provide customers with the products and services they need and value,” a company spokesperson said. “If any customer has a concern, we work hard to resolve the issue directly so that a formal dispute resolution procedure is not necessary. “If we can’t resolve an issue directly, we will resort to arbitration.”

Consumers may not consider the ability to sue when choosing a card, but it’s a factor to consider, Schulz said.

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“If you don’t like the terms of your card, don’t be afraid to shop around, or even walk away.”

To be sure, there are other ways to resolve disputes with companies. Consumers can resolve disputes directly with the company through the Complaints Repository or file a complaint with the CFPB.

CreditCards.com found that many cards with mandatory arbitration clauses exclude disputes that cannot be handled in small claims court. Active military personnel and their dependents are also exempt from the mandatory arbitration provisions of the Military Lending Act, Schulz said.

According to the CFPB’s survey of anti-arbitration rules, only about 2% of consumers with credit cards said they would consult an attorney or consider formal legal action to resolve a small-dollar dispute. Separately, 89 percent of consumers said they wanted the right to join class-action lawsuits against their banks in a 2016 survey of about 1,000 consumers by the Philadelphia-based nonprofit Pew Charities.

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Still, cards with mandatory arbitration clauses aren’t necessarily deal breakers, said Brian Karimzad, vice president of research at LendingTree, parent company of credit card site CompareCards.com.

In many cases, lawsuits are time-consuming and take years to see consumers pay them, he said.

Strengthening complaints by bank regulators, he said, could be a good first step instead with the CFPB’s help.

He said customers should know the card’s terms and conditions, and if they have a choice, they should do so as soon as the consumer activates the card.

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Can A Credit Card Company Garnish My Wages?

Having trouble paying your credit card bills can be stressful. This debt can feel like it’s hanging over your head, and the longer it goes on, the more financial problems it can cause. If you’ve had an unpaid balance for a while, you may be wondering – can the credit card company sue you? This guide answers that and covers what to do about high-cost credit card debt.

It’s often easier to refinance credit card debt. With a debt consolidation loan, you can get lower interest rates and fixed monthly payments. Check out the best debt consolidation loan options for you.

Yes, the credit card company can sue you if you don’t pay your credit card fees. Although this is a last resort because of the time and money involved, the longer the bill goes unpaid, the more likely it is.

Since credit card debt is unsecured debt, the creditor needs a judgment to collect from you. If he gets the judgment, you may be subject to garnishment of bank accounts or wages and liens on property you own.

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Many credit card companies sell long-term accounts to debt collectors who want to pay off their debts. Borrowers can also sue you if they buy your loan.

Having a past due credit card can lead to lawsuits against you. However, this will not happen immediately. The steps taken by the credit card company depend on when you last paid.

Up to 90 days: Your card issuer will notify you and may charge you a late fee for any monthly payments you miss. When your account is 60 days past due, the card issuer starts charging you a higher interest rate, called a penalty APR. Your credit score may drop during this phase, but you can still make payments and keep your credit card account.

90 to 180 days: The card issuer usually charges your account, which means it closes your credit card. It either transfers the debt to its own in-house debt collection service or sells it to a third-party debt buyer. The issuer may sue you at this point, although this is unlikely to happen.

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Past 180 days: During this stage, you are at higher risk of being sued for your credit card debt. Whether the debt is in the hands of a credit card company or a debt collection agency – both can sue you.

Even if your credit card account is past due, you can usually avoid a lawsuit. If the card issuer wants to take out a loan, the best strategy is to try to pay off the credit card debt.

Call your credit card issuer at the number on the back of your card. Explain that you are facing a difficult financial situation and would like to learn what type of payment assistance your card issuer offers. Here are some common debt relief tips:

There’s a good chance you and your card issuer can work something out, such as a payment plan you can afford. Remember: Credit card companies don’t want to sue cardholders. If you keep in touch and show that you’re willing to pay even a small amount, this will ensure that you don’t end up in court.

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