Legal Question in Credit and Debt Law in California

I've recently been informed that I've been named in a lawsuit by Capital One (received a letter from a "financial service" out of Long Beach, CA). The summons hasn't arrived yet but I fully believe it will. I've owed just under $3000 to them for many months. I've talked with collection agencies representing Capital One and have explained that due to the economy I've been unable to make payments. I filed taxes for just over $14,000, and currently am making $150/week due to hours at work being severely cut.

I have a few questions, but my biggest is due to my financial situation will wage garnishments be available as an option for the courts?

Also, from what I've researched, in December of 2009 Capital One discontinued their mandatory arbitration clause included in their account agreement. However, my account had been closed long before that, and the mandatory arbitration clause was in effect during the time my account was open. Does the mandatory arbitration clause still apply to my account since it was in effect during the time my account was open? From everything I've researched the answer appears to be that the arbitration clause takes precedent so no legal action should be available to Capital One, but I want to be sure.

Thank you very much for the help.

-Daniel


Asked on 4/19/10, 11:59 am

2 Answers from Attorneys
Robert F. Cohen Law Office of Robert F. Cohen

The reason the arbitration was discontinued is because it was alleged that the credit card companies were the ones funding the arbitration services, so there allegedly was a bias in favor of the credit card companies. You probably would not want to insist on arbitration, in any case.

You will have 30 days from the date the summons and complaint are served upon you to answer the complaint. If you do not do so, the bank likely will obtain a default judgment against you not only for the principal, but accrued interest and attorney's fees. The judgment likely will be double the amount owed by the time everything is finished. Interest accrues at 10 percent per year. A creditor can levy wages and bank accounts, among other things, although a debtor can ask the court to find that there is a hardship if 25% is taken out of each check, and the court can order that the levy be reduced, accordingly.

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Answered on 4/24/10, 2:45 pm
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

The collection agency letter that said you have been "named in a lawsuit" might be a false statement, if there is no actual lawsuit on file this could be a violation of the fair debt collection practice laws and would enable you to sue the collection agency. You can go to any L.A. County courthouse (for some reason this information is not available online) and find out if there is really a lawsuit on file with your name on it. If not....

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Answered on 4/24/10, 5:58 pm


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