Credit Card Lawsuit
Sued by a collection Agency for Credit Card debt.

CREDIT CARD LAWSUIT

What to do when you have a credit card lawsuit

You need to respond quickly when a credit card company files a lawsuit. If you receive notice that a credit card company is suing you, the worst response is to do nothing. Not responding can lead to unnecessary expense and embarrassment. Call Mississauga Paralegal, learn about your rights, and take positive steps to settle your debts and relieve your stress.

If you do not respond to the lawsuit, the credit card company may get a default judgment. In the judgment, you could owe every nickel you spent plus interest plus attorneys fees.The company can garnish your wages, taking money straight from your paycheck. Armed with the judgment, the credit card company can go after your bank accounts and other assets, including assets that are fully paid for.

assignment of debt


It appears that various collection agencies in Canada  purchase delinquent or charged-off debt, usually defaulted credit card payments , this is also known as debt assignment.

Section 53.(1) of Conveyancing and Law of Property Act, RSO 1990, c C.34,sets out the requirements for a perfected assignment of debt.

Assignments of debts and choses in action

  1. (1)Any absolute assignment made on or after the 31st day of December, 1897, by writing under the hand of the assignor, not purporting to be by way of charge only, of any debt or other legal chose in action of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action is effectual in law, subject to all equities that would have been entitled to priority over the right of the assignee if this section had not been enacted, to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor. R.S.O. 1990, c. C.34, s. 53 (1).

For there to be a valid legal assignment under section 53(1) of the CLPA, four requirements must be met:

  1. a) there must be debt or chose in action;
  2. b) the assignment must be absolute;
  3. c) the assignment must be written; and
  4. d) written notice of the assignment must be given to the debtor.

First there must be notice that the account has in fact been sold. A letter or notice from the new owner (the collection agency) is not sufficient.

The written notice needs to include some type of indication from the original creditor, or assignor, that all future payments are to be made to the assignee.

The notice also needs to have the signature of by the original creditor and indicating, with what I would call reasonable certainty, the specific account and the rights that were transferred.

Experience shows that these two documents are rarely available provided. For whatever reason, debt repurchases ignore the important step or perfecting the documentation of the relationship of the collection agency to the original creditor.

The collection agency would rather tell you that you are now supposed to pay. Additionally, the original creditor wants to dump the debt without incurring the additional cost of authenticating every assignment.

OTHER CREDIT CASES – CLIENT DOES NOT AGREE WITH AMOUNT CLAIM OR AMOUNT OF INTEREST RATE CHARGED

In other credit card lawsuits, some clients are sued for amounts that they did not sign up for. For instance the credit card company sues its customer for $10,000.00 and the customer complains that it signed a “fixed credit” agreement for $5,000.00 and not $10,000.00 as sought by the credit card or the credit company.
In other cases, the client may not agree with the interest rate charged “fixed credit” means credit
The Consumers Protection Act 2002, provides relief when the “Act” is contravened also known as the “LAW”.
Under the Consumers Protection Act 2002 it states:

Change in interest rate

(5) A lender under a credit agreement for open credit who, pursuant to the agreement, changes the interest rate under the agreement shall deliver a disclosure statement to the borrower disclosing the change,

(a) in the next statement of account after the change, in the case of a credit agreement that is not for a credit card; and

(b) at least 30 days before the change, in the case of a credit agreement that is for a credit card where the interest rate is not a floating rate.  2002, c. 30, Sched. A, s. 81 (5).

Other changes

(6) Subject to subsection (7), if the parties have agreed to amend a credit agreement for open credit and the amendment changes any of the information prescribed under subsection 79 (3), the lender shall, within 30 days after the amendment is made, deliver to the borrower a supplementary disclosure statement setting out the changed information.  2004, c. 19, s. 7 (25).

Same

(7) If the parties have agreed to amend a credit agreement for open credit in respect of a credit card and the amendment changes any of the information prescribed under subsection 79 (3), the lender shall deliver to the borrower a supplementary disclosure statement setting out the changed information,

(a) within 30 days after the amendment is made, if the change is not a material change, as prescribed; and

(b) at least 30 days before the amendment is made, if the change is a material change, as prescribed.  2004, c. 19, s. 7 (25).

In a recent decision the court has ruled that a failure to provide notice as prescribed by the law will result in removed liability to the customer.

Learn more by contacting us, to see how we can help you resolve your debt lawsuit with a no-fee consultation.

USUAL OCCURRENCES IN CREDIT CARD CASES

  • Orginal Creditor

    The Company who first owned the debt

  • Collection Agency

    In most cases the collection agency purchases debt from original creditor also known as debt buyers.

  • Additional Collection Agency

    The debt may be purchased by several debt buyers who will attempt to pursue the debt.

  • Limitation Period

    Collection Agencies will pursue the debt and will attempt to render judgment against you.

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