Eliminate Credit Card Debt With The Court System
If you are saddled with credit card debt you are probably wondering what is the worst that can happen to you. Use your reasoning for a moment and think of a person with $30,000 (5 credit accounts) in credit card or unsecured debt. His debt payments might have tippled in recent months and his interest rate is now much higher than it was, maybe 20% - 30%. No matter what his payments are, or that is, what the creditor says they want every month, there is no law commanding any penalty on him if he basically stops making the payments to his creditors.
If he does zilch, and the most horrible of the worst case scenarios happens, all five creditors sue him and obtain a judgment within 16 months of the first nonpayment. This time period is normal, but the chances that they all would sue him at one time is extremely unlikely, whichever way.
Most state laws impose a legal interest rate attached to judgments of this sort (usually where the contracted interest rate exceeds the state's legal rate) and that rate is not subject to the "unlimited" rate allowed in the credit agreements these days. It typically ranges from 5% to 12% depending on the state of residence.
If the person was to do nothing, and these judgments were received and the first judgment creditor completed a writ of continuing wage garnishment, they could get the maximum of 25% after the CCPA exempt amount (Table of Limits) and after tax withholdings; this would preclude all four other creditors from this example from taking any part of his earnings or paycheck.
So the monthly payments he was making 16 months ago, about $900 to $1100, at an interest rate of about 25%, could now be $300 through the wage garnishment, at a rate of 12% or under. That's how you refinance, and now he is paying only one creditor at a time instead of all of them at vastly lower rates and lower monthly amounts. He is paying based on his ability to pay and has financial control, and is not paying based on how much the world or the creditors says he owes, thanks to the CCPA.
Deciding to not pay your credit card debt monthly payments may strategically be the best thing for your financial position if you understand a few key things about common law and how the court system can be used to your advantage.
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