Credit Card Debt

Credit Card Collection Issues in Iowa

There are many issues surrounding the collection of credit card accounts. Many people ignore their debt collection problems until they receive a “right to cure” notice or becomes the victim of abusive debt collection tactics. Students, consumers, and debtors should consider the following questions and immediately contact us for a free consultation.

The answer to these and other questions affect the debtor’s rights and abilities to defend against credit card debts. Credit counseling and debt settlement companies are rarely the answer. The reality is these companies frequently make matters worse. Consumers often find themselves defending lawsuits on their own despite paying debt settlement companies far more than what it would have cost to have qualified legal representation. Credit counseling agencies may be funded by the very creditors who are suing you. Do you think they will raise defenses to the debt or refer you to a qualified attorney to bring an unfair debt collection case for you? How long do you think a credit counselor’s funding would last if they did that?

 Does the debt belong to you or do you even owe the debt?

Debt collectors attempting to collect credit card debts will use data-harvesting techniques that can mix personal information for people that do not owe the debt. People may also be the victims of identity theft or mistaken identity. Creditors are losing personal data of consumers at an alarming rate. If you have a social security number there is a pretty good chance it has been stolen from a large corporation you gave it to. It is amazing any creditor or the government still actually considers a social security number a confidential piece of identifying information. These data breaches can result in your money being stolen in a multitude of ways. In other circumstances, debt collectors will attempt to collect a debt that has already been paid in full, or more than one collector is attempting to collect the same debt. Many times it is impossible to determine from the collection call or collection letter what account is being collected.

How old is the alleged debt?

Debt collectors frequently attempt to collect debts that are beyond the statute of limitations and too old to collect by suing the debtor. The Iowa statute of limitation for credit card debt may be five years, but the Iowa Supreme Court has not yet addressed the issue. The five year statute of limitations was established by a 2-1 decision of the Iowa Court of Appeals in an appeal brought by the Johnson Law Firm. Prior to that time, lower court judges and debt collectors considered the statute of limitations on a credit card debt to be ten years for a written contract.

Who is collecting the credit card debt?

Out-of-state debt buyers purchase accounts for pennies on the dollar and generally do not sue consumers until the debt is in the hands of one of the collection law firms that sue Iowans. Out of state collectors have been known to resort to harassment or other illegal and unfair debt collection methods to coerce payment. Once the debt is in the hands of a debt collection law firm known to sue Iowans, the typical collection method is a right to cure letter followed by a collection lawsuit against the consumer. At this stage it is very important to involve a qualified collection defense attorney. The Johnson Law Firm offers a free consultation and it would be wise to take advantage of that if you are uncertain as to how you should proceed.

Are you being abused, harassed, or have the collectors committed other unfair debt collection violations?

The best defense is a good offense. Certain unfair debt collection violations may be used to negotiate a substantial reduction in the alleged debt or even eliminate them completely if the violation is particularly egregious.

Have you received a right to cure letter from an attorney who collects debt in Iowa?

A right to cure letter from an attorney who collects debt in Iowa is often a sign that you are about to get sued.  Attorneys fees can be less to settle a debt prior to the time a lawsuit is filed, and in some cases settlements can be more favorable to you just prior to litigation because litigation costs can be avoided.

What is your source of income?

Many individuals’ only source of income is Social Security or other exempt income. These debtors may be judgment proof. Cease and desist letters from an attorney may resolve the issues and will get the collection attempts to stop.

Do you have substantial assets?

After consulting with an attorney, individuals may discover their options are limited if bankruptcy is not a possibility. The best option may be to settle the debt. An experienced collection defense attorney will generally be able to obtain the best settlements, avoid credit damaging judgments and properly document the settlements while protecting the consumer’s rights. Many consumers who negotiate their own settlements make critical mistakes, including but by no means limited to failing to properly document the terms of the settlement or the existence of the settlement itself, and they end up being subjected to collection once again for debts they thought they had settled. Another mistake is to allow the collector to secure a credit damaging judgment against the consumer when the case could have been easily settled by an experienced attorney without a judgment. Other consumers are completely unaware of tax implications of a settlement and issues to raise with their tax advisor that may very well result in the cancelled debt not being taxed at all.  Examples include insolvent consumers and disputed debt.  The Johnson Law Firm does not give tax advice, but these are issues that should be raised with a tax advisor and many clients report they have successfully done that on these tax issues.

Has the creditor sued or obtained a legal judgment?

You have fewer options if the creditor has obtained a judgment against you. Nevertheless, you may have options if you were not properly served the lawsuit. Rarely is ignoring the lawsuit and letting the creditor obtain a default judgment the proper response to a lawsuit. This is probably the biggest mistake consumers make in debt collection defense. DO NOT DEFAULT ON COLLECTION LAWSUITS! DO NOT TRY TO REPRESENT YOURSELF IN DISTRICT COURT IF YOU DO NOT KNOW WHAT YOU ARE DOING. Instead, take advantage of the free consultation we offer to assist you in dealing with your debt situation. 

Were you sued without any notice?

Debt collectors filing lawsuits must provide notice by serving papers on the consumer. Unfortunately, some creditors and their attorneys believe that default judgments are easier to than dealing with a consumer raising legitimate defenses to their lawsuits and will not properly serve the people they are suing. Contact an attorney immediately if you were not properly served a lawsuit or were served a lawsuit intended for another person.