When you get a credit card, you agree to make monthly payments. This agreement constitutes a legal contract. When you don’t make these payments, you are in breach of this contract. Credit card companies have various options for trying to collect debt after you breach the Credit Card legal terms and conditions. One of these options is to sue you, seeking a judgment and thereafter garnishing your wages.

It is common practice for large banks and Credit Card issuers to sell your delinquent credit card debt to a debt collection agency.

You will know that the sale of the bad debt has occurred by checking your credit reports and confirming whether your delinquent Credit Card(s) were “Charged Off.” In circumstances like this, you will still owe the debt, but now it is owed to the debt collector and not the original credit card company.

Credit Card debt collectors purchase your debt for a fraction of what you owe and try to get you to make regular payments. They can also sue you in court. If they get a judgment, they can garnish or attach your wages.

The best way to control and protect against a wage garnishment is to have an attorney confirm the exceptions that exist in your State – there are wage garnishment rules and regulations for each State and it must be provided by the debt owner to the debtor as a document when the debt is alleged by mail. 

Try to see if any of the exemptions apply to you and your attorney will look for other illegalities and seek to use it as legal leverage to force home the best possible settlement. Remember if we settle for example on $120 payable over 12 months, there is no further interest accruing and no legal fees or court costs. In other words, the figure and amount you agree to settle is the maximum the debt buyer or collection agency can accept legally.

Entering a settlement remains an effective legal mechanism to avoid wage garnishment. Any evidence or proof of financial hardship such as outstanding tax bills, child support, back rent owed are hardships that will be used again as legal leverage to obtain an affordable and binding legal Credit Card debt settlement.

Also, when you receive the wage garnishment notice, look for the State Wage Garnishment exemption law sheet to be included and check whether you qualify for a state exemption to wage garnishment.

As stated previously, each State’s laws allow you to protect a portion of your earnings. If you believe you are entitled to an exemption or according to wage garnishment calculations, you have had too much money deducted, your Credit Card attorney can file a legal document in court while claiming the exemption. It is entirely up to the judge who will decide whether the garnishment is valid or not. Be sure you file your exemption claim documents before the given deadline.

When you receive a Credit Card, you are legally agreeing to make monthly payments. This may be your monthly minimum or your balance. In turn, the Credit Card issuer reports your payment, or non-payment to one or all of the main three (3) credit reporting agencies, Experian, Equifax and Transunion. If there is a late or non-payment, it will be reported as such to the Credit Agencies and in turn your FICO (credit score calculation) will decrease. A bad Credit Card debt reported on your Credit Report can remain for up to seven (7) years.

Yes, by accepting the Credit Card you are accepting all of the cards legal terms and conditions that follow along with the card. You do not even need to use your Credit Card to establish a legal relationship between you and your Credit Card issuer. Within the legal terms and conditions is a section whereby you promise to repay the Credit Card issuer for the credit it extends you. This is a legally binding contract and accordingly, if you fail to make a payment the Credit Card issuer or collection agency can sue you and obtain a judgment and garnish your wages.

The vast majority of Credit Card lawsuits filed by a Credit Card company or Credit Card debt collector, allege “Breach of Contract.” Accordingly, it is important for any person currently holding Credit Cards or considering originating a new Credit Card, to understand a little more about contract law and the allegation of Breach of Contract.

In order to understand what a breach of contract is, we will first establish what forms a binding contract or agreement.

In its raw form a contract is essentially a promise. It is a promise from one party to another party to perform or refrain from certain acts. The promise most often pertains to payment or the repayment of money. In the case of a Credit Card, , you are promising to repay the Creditor for the sum of credit you receive through using your Credit Card, and you are required to pay at the interest rate agreed to in the legal term and conditions.

Thus, any act or lack of acting by you that impedes, directly or indirectly, the ability of the Credit Card lender to collect on the Credit Card, is considered a breach of the Credit Card Agreement.

Now that we have established the existence of promises in a Credit Card Agreement, let us examine the most basic but essential elements required to form a legally binding agreement or contract.

In its most simple form, a contract is a legally binding promise contained in a written document and to be binding and legal, the contract must encompass and incorporate the following:

• An offer – here, the Credit Card issuer offers you credit via a Credit Card.
  
  
• An acceptance of the offer – here the signing of the MCA Agreement and receipt of the Consideration (both parties must give and receive something of benefit) – here the Merchant receives Credit and the Credit Card company receives repayment at a high interest rate.

Poorly drafted Agreements can be legally attacked.

Many Merchant Cash Advance Agreements are poorly-drafted and frequently lead to disputes. Even a poorly drafted document can have massive repercussions and thus, it is in a merchant’s best interest to have a competent and experienced Merchant Cash Advance attorney review the agreement prior to the merchant signing. Additionally, many clauses within a Merchant Cash Advance are more akin to a traditional loan and can be challenged as such by your MCA attorney.

What elements are needed for a Credit Card issuer to claim Breach of Contract?

• Formation of a contract between plaintiff and defendant,
• Performance by the Credit Card issuer of its duties and obligations, and
• Defendant’s failure to perform – i.e., making timely repayment, resulting in damages to the Credit Card issuer or Debt holder.