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BY MARC BROWN
The recent financial recession has resulted in a surprising increase in the number of lawsuits filed over credit card debt in New Jersey courts. Even people who are quite well off are getting involved in the litigation process.
Cases filed for recovery of debt ($3,000-$15,000) have increased at least 25% between 2007 and 2010. This substantial hike, according to court officials, is mainly due to credit card debt. Remember that the mentioned statistics do not include debts above $15,000. Even some of the affluent counties have witnessed a considerable surge of cases as per court records. Hunterdon, for instance, has witnessed a 62% increase between 2007 and 2010. However, to some lawyers this is no big surprise. They said that their clients usually comprised of people with low income. These people basically depended on credit cards to live a more luxurious life. As soon as they faced some emergency situation during the recession (for instance, job loss or divorce), they got sucked into debt.
Some people try out debt settlement to remedy credit card debt. Sometimes it works but often the creditors are looking for a payment that the debtor cannot afford. However, a considerable number of credit card litigation cases are settled.To maintain a swift pace in spite of tremendous pressure, the courts are introducing new measures. For instance, special civil suits are to be filed through judiciary electronic filing system. Court employees say that they are applying proper management plans to stop things from stagnating. This is evident from the fact that while the number of civil cases filed has increased by 14% between 2007 and 2010, the number of civil cases successfully solved has increased by 17% during the same time span.
If you are in a credit card debt case then make sure that you turn up in court on the due date. Otherwise the creditors could get a one sided judgment against you from the court. Once they do that they can seize the debtor's assets, seize the bank accounts and garnish wages too. It might sound ironical but sometimes even after all their efforts the creditors fail to recover their money. This is because during a tough time, some people simply do not have the money. All over the U.S, financial institutions are filing lawsuits but failing to collect the debt and reporting charge offs. This situation in New Jersey confirms to the national trend.
Do you know that charge off due to credit card debt crossed $37 billion in the U.S in 2010? Even a bank like Chase failed to recover more than $3 billion from the consumers with credit card debt even after filing lawsuit.
RELATED:
N.J. Consumer Affairs begins credit repair campaign
An insider from Chase said that the rise in lawsuits can also be attributed to the increasing number of debt settlement companies who recommend that people halt their payments even before reaching a settlement agreement with the creditors. The financial institutions, therefore, sue the debtors.
If you want to evade lawsuits at any cost then you might talk to your creditors to restructure your payments. You can also approach the bank through non-profit credit counseling agencies.
This is a Guest Post by Marc Brown, a financial writer.
He has been consistently providing people with unique advice on budgeting, investment & debt relief <http://www.ovlg.com/> since 2007.
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