If it’s broke, you can still fix it: A look into credit card debt
Magisterial District 05-2-42 News: Judge Leah Williams Duncan Esq.
We’ve all heard the saying “If it’s not broke, don’t fix it.” But, what about the other side of the issue and what happens when “it” is broken and when the “it” is your credit?
Since taking office in January of 2022, one of the things that has surprised me most is the number of credit card default cases that come before me on a regular basis. Every week, I see at least five to 10 complaints involving persons who have used lines of credit only to later find themselves unable for whatever reason to make the required payments. Since we’ve just come through a holiday season during which many of us may have overspent, now seems like a good time to address credit, what happens when it’s broken and how we might begin to fix it.
Unfortunately, many of us don’t realize the value of good credit until after it’s already broken. I vividly remember being on campus at Penn State, pre-employed but still bombarded with a significant number of credit card applications. It seems that some companies are willing to take a chance on extending credit to college students before they have jobs (go figure, especially since the majority of college students are already in debt due to education loans, but that’s a subject for another month).
The thought of free spending, however temporary, is just too tempting to pass up and we quickly find ourselves in over our heads with maxed out lines of credit, making minimum payments, if any payments at all, and then sinking deeper and deeper in debt with no idea or plan for getting out of this seemingly insurmountable situation.
Sadly, damaged credit doesn’t just affect our ability to obtain more credit (usually necessary to purchase much needed and much desired staples such as a home or a vehicle). Damaged credit may also affect our ability to rent an apartment or a house since most landlords require a credit check. Further, damaged credit can also affect our ability to obtain employment as many employers also now require a credit check in conjunction with standard job applications. Ironically, when one needs a job in order to pay a debt, the inability to pay the debt may be the very thing standing in the way of getting the job. So where do we go from here?
Credit planning and credit repair are subjects that can fill a full day workshop (which we do hope to have in the near future) but for now, here are a few tips for if/ when you find yourself on the receiving end of a civil complaint and a notice to appear before your local Magisterial District Judge due to an inability to pay a credit card debt:
1. Don’t panic — This “civil” action could be your first step towards actually fixing what is broken. Such a complaint can be a motivating factor and a door opener to programs that may be able to assist you through this uncomfortable and tedious process.
2. Show up and take advantage of the opportunity to have your day in court. Simply put, you cannot win if you don’t appear! However, when you do appear:
— You may actually be able to prevail by presenting a proper defense and relevant documentation and/or information.
— And even if you do prevail, credit card companies often send to the hearing a representative who is authorized to work out a very reasonable settlement and/or payment plan with you. (Please note that the court cannot set up a payment plan as a resolution to these actions)
3. You can appeal — If you find that you are lacking necessary documentation and/or information at the time of your hearing, if you were simply too nervous to present your case well or if you could not appear for some reason, you will have the opportunity to appeal the decision of the Magisterial District Judge.
4. Ignoring it won’t make it go away — even in cases where the debt is charged off or “forgiven,” remember that there are still possible long term effects, specifically the inability to obtain credit in the future, and the negative marks on housing and employment applications.
5. Seek representation or at least a consultation with an attorney or an agency such as Neighborhood Legal Services. Having a complaint filed against you does not automatically mean you lose even if you did incur the debt. A little advice could go a long way.
Conclusion: The holiday season should be a time of enjoyment and not a source of stress caused as a result of our good intentions in showering family and friends with gifts of love and tokens of appreciation. And while it is possible to over do it, don’t fret. Although an ounce of prevention would be better than a pound of cure, it is often possible to undo what has been done and to fix much of what has been broken. Just keep in mind that though it may be a marathon instead of a sprint, the race towards credit restoration is well worth the trip even when it begins in the office of your local Magisterial District Judge. Take care and have a Happy New Year!