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When Life Happens and Creditors Sue

You’ll get no judgment from us and can get out of your court judgments, too.

Woman reflects on her financial situation after facing challenges with debt due to unemployment

As cliché as this may sound, life happens. For Socorro numerous factors combined to get her into debt. From helping raise her grand-babies to losing her job and even being sued for credit card debt by some of her creditors, there was no shortage of challenges that Socorro faced.

“It was one thing after another. One day I had a job and the next day I didn’t,” Socorro recalls. “I was using credit cards to help me pay bills and it got to the point where I exceeded my limits. Then I stopped paying the bills, I just let them go. Three of my creditors sued me and had judgments brought against me. I didn’t know what to do.”

And if you’re wondering if creditors can sue you, yes they can…

Creditors can have judgments brought against you in civil court if you cannot pay your debt. If you ignore these suits – or in some cases, you aren’t aware that they are happening – then collectors can win default judgments. This can force you to pay through things like wage garnishment and liens. Thankfully you may still be eligible to enroll in a debt management program if you’re being sued.

Credit card debt problems are often a slippery slope, particularly when those credit cards are being used to cover budget gaps caused by lack of income. To an unprepared budget and to someone carrying debt, losing a job can spell financial disaster. Socorro resorted to using seven credit cards to buy pampers, groceries and to cover other expenses like car payments, racking up debt to the tune of $12,000. Additionally, credit cards are often used to pay other credit card payments as the distressed debtor juggles their bills.

“One day I had no job and there I was with all my credit card debt. I had to survive.”

Once the credit limits are reached, you’re stuck with debt that you can’t pay back that goes to collections.  If you don’t pay the collectors, they can take you to court which can lead to even greater financial challenges.

It is a scenario that many Americans can relate to because they aren’t saving for rainy days.  Studies show the majority of Americans, even the affluent couldn’t cover a $1,000 emergency bill or a $500 unexpected car repair. And like Socorro, if they were to lose their job would find themselves in a similar predicament.

When her budget hit bottom, Socorro sought help…

Feeling desperate, Socorro turned to a friend who directed her to a different credit counseling company at first. That credit counseling company then transferred her to Consolidated Credit.

“I was in a very desperate situation. I needed help and you guys have helped me get out. It’s been three years and I have one more credit card to pay off. Thank you for helping me and being patient with me.”

“You didn’t give me any problems. You didn’t judge me. You just helped me.”

Socorro will soon be debt-free. Not only did she pay off her debt, she learned how to become a better money manager by taking advantage of the wealth of resources on our website and putting into practice the lessons of the debt management program.

“You guys taught me a lot. Thank you for working with me and showing me how to budget my money. I’ve learned to save and I’ve learned to use money wisely. I really thought I wasn’t going to finish but there is light at the end of the tunnel. One more month and I’ll be done. Thank you, thank you!”

Soccoro is incredibly happy to be on the homestretch. How did she do it?

Soccoro says her success is all due to Consolidated Credit for negotiating lower interest rates with her creditors. After careful assessment of her budget, Consolidated Credit put her on a payment plan and schedule that suits her unique situation and aligns with her income limitations.

“My interest rates were over 21% before called. But after you negotiated with my creditors, some were brought down to as low as 0%. My credit score even went from 540 to almost 800.”

This negotiation is just part of the service provided when someone enrolls in a debt management program. In addition to providing guidance and financial education to Americans, our certified credit counselors negotiate lower interest rates with our client’s creditors. Often high interest rates are the culprit for keeping clients in debt longer. A huge chunk of each monthly payment usually goes towards the interest rather than the principal, perpetuating the cycle of debt. With low interest rates, a higher percentage of their payments go towards the principal instead of interest.

Socorro also reports that her credit score improved over the course of the program. Socorro’s score was subprime when she began the program. With a 540 FICO credit score, Socorro would have trouble getting approved for loans and new lines of credit. It could also affect her ability to rent property or even secure new employment.

However, often clients see their credit score improve as they work through the program and complete it successfully. By building a positive credit history and reducing the unsecured debt levels, clients like Socorro who are having trouble with low scores have enjoyed the happy side effect of seeing their scores improve as they eliminate their debt.

Her financial outlook is changing for the better and Socorro couldn’t be happier…

One of the requirements of the debt management program is that you stop charging on your credit cards since the accounts are frozen. Although it was tough, Socorro ceased charging on her credit cards, and because payments were made consistently and on time, her credit score got a boost. Now she has a balanced budget, better credit, and no credit card debt to worry about paying back.

“I feel relieved. I’ve learned my lesson not to charge because charging is an addiction. You see the credit cards and you keep charging because it’s easy. My dad had a saying it’s easy to get in but hard to get out and that’s exactly what I went through.”

Nothing in life comes easy. In order to achieve freedom from debt success, Socorro had to make numerous sacrifices.

“I had a hard time but I did it and I’m so proud of myself. You really have to commit to the debt management program, not just start it and then quit. If you want to see a light at the end of the tunnel you have to stick with it and you have to sacrifice a lot of things. I had to learn that if I wanted a purse I had to say, ‘no I can’t use the credit card for that.’ A lot of my debt too was on nonsense, a lot of nonsense. I don’t want to do that anymore. I’ve learned from my bad experience. I’m almost there and I can now breathe a huge sigh of relief.”

Although she does not swear off credit cards, the debt management program has taught her a lot including how to control her spending.

“I have 2 credit cards but at a $500 limit compared to a $10,000 limit.”

But don’t expect her to engage in frivolous spending…

“Just because you have a credit card doesn’t mean you have to go out and get an expensive purse  – that’s what I did. I’m not even joking. Or say I will charge this now and pay for it next month. But you never know what tomorrow will bring. It was hard but I will keep moving ahead and do everything the right way.”

For the past 28 years, Consolidated Credit has helped over 10 million Americans like Socorro get out of debt and achieve their financial goals. Socorro couldn’t be more grateful to the credit counseling company that helped her achieve just that.

“You guys taught me a lot. I just want to go to sleep at night and wake up knowing I don’t have credit card debt, that I can budget my money, save and use credit wisely.   Thank you so much! Hopefully, I won’t have to do business with you again but if I falter I know just who to call.”

If job loss has led to credit card debt for you, we can help. Talk to a certified credit counselor for a free debt analysis.