What to know if you maxed out a credit card and then stopped paying

Marlena Telvick

A lawyer sent a letter to a woman he was suing over a credit card debt. He wanted her to answer some questions and get back to him.

Here’s how the letter begins:

“Enclosed please find Plaintiff’s Interrogatories to Defendant, 1st Series.”

And it goes on:

“Please provide your written responses, signed under the pains and penalties of perjury, by mailing a copy to my office within the timeframe set forth in the Massachusetts Rules of Civil Procedure.”

That’s it.

I went to law school (please don’t hate me). Just reading the words “Rules of Civil Procedure” sent a shiver down my spine. There are hundreds of rules of court procedure, assembled into categories, and subcategories, and sub-subcategories. It’s taught as a grinding, yearlong course. The online version of the “rules” runs 258 pages. Learning it appeals to a very narrow segment of the human population.

I came across the letter while standing at the counter in a local courthouse doing research into the practices of debt collectors and their lawyers. I lingered over it.

Why would the lawyer refer to the timeframe “set forth” in the rules of civil procedure when what he meant was, “You must answer within 45 days”? (I looked up the rule.) Why “interrogatories” when “questions” would have sufficed? Why emblazon the letter with an eight-digit law office file number (123XY345) at the top and the bottom of the page?

I’m going to speculate the lawyer was trying to intimidate the woman into cutting off further correspondence by agreeing to make monthly payments. Which is what she did.

Did the system work?

Only if you are a debt collector.

The woman told me she opened a credit card account years earlier, ran up thousands of dollars in debt, and stopped making payments. It was wrong, and she regrets it. At first, the credit card company pestered her, but then faded away. She moved on. She’s now employed by a nonprofit (in fact, two of them, working seven days a week). She pays her rent and utilities and medical bills and gets by.

Then “The Law” came knocking. Not the credit card company — something perhaps more threatening: a law firm willing to use the law as a cudgel. Today, more lawsuits are filed in Massachusetts courts over credit card claims than any other dispute — tens of thousands of them. Someone in your family, your neighborhood, your church, or your workplace is probably named in one of them. Maybe you are.

The thing to know and pass along is that you don’t have to be bullied.

If you’re poor — making less than $550 a week — or relying on Social Security, veteran’s benefits, or disability payments, you can’t be forced to pay off certain debts.

No one can be forced to pay without the collector showing some proof of the debt, such as the original agreement or payment history. And you can’t be forced to pay a debt that has gone more than six years without any activity on the account.

Debt collectors can’t call you at home more than twice in a seven-day period, or more than twice in any 30-day period at some place other than your home, such as your place of work. But they can’t call you at work if you have asked them not to call you there.

They can’t call before 8 a.m. or after 9 p.m., and they can’t come to your home outside of normal waking hours, and then just once a month. (www.mass.gov/ago).

So there are protections for the indebted, but deadbeats do pay a hefty price in ruined credit. Don’t expect to get a mortgage or auto loan with bad credit. And bad credit can haunt you when trying to get a new job or apartment.

The path to good credit is a history of paying back debts, but that’s hard to do when no one will lend you money in the first place. (You are entitled to one free credit report from each of the three credit agencies per year; go to www.annualcreditreport.com).

Few credit card debtors wind up in bankruptcy court. For one thing, it’s difficult to navigate without a lawyer, which means it’s expensive. Also, many credit card debtors owe in the range of a few thousand dollars and have no real estate, bank accounts, or other assets to shield.

The advantage of bankruptcy is that it puts a halt to attempts to garnish your wages or otherwise get at your assets. But for credit card debtors, there’s often little for creditors to go after.

For those who do go into bankruptcy, some debts might be discharged. The point is to allow debtors to get back on their feet, which requires the “necessities of modern life,” such as a motor vehicle, clothing, and household appliances and goods. Those are usually exempt (assuming they were not pledged as collateral on a loan). But child support, alimony, and tax debts generally can’t be wiped out by the court. Student loan debt can be discharged only when the debtor faces the most dire of financial circumstances.

Bankruptcy remains on your credit report for at least seven years in most instances.

The pace of credit card debt collection has stepped up in recent years because of a change in who “owns” your debt.

It used to be credit card companies hired a collection agency. Not so much anymore. Now they write it off as a loss. Then they “sell” the debt for a few cents on the dollar to corporate debt buyers.

A debt buyer may spend $50 for a $1,000 debt. That means basically anything it collects over $50 — up to $950 — is profit. It’s a strong motivator. Often, they hire law firms like Lustig, Glaser & Wilson of Waltham.

Lustig is a debt-collecting machine. In a recent five-year period, it filed 100,000 lawsuits in Massachusetts and collected $100 million, state Attorney General Maura Healey says.

Healey is suing Lustig. In her filings, Healey portrays the firm as hustling people who are ignorant of their rights into bad agreements to get the hounds off their backs.

Lustig denies any wrongdoing.

The hallways in some district courts are crowded with people awaiting court appearances on credit card debt. At Boston Municipal Court on a recent afternoon, about 50 cases were called. Lustig represented the creditor in about 80 percent of them.

No one looked particularly happy to be there, except for a handful of volunteer lawyers, mostly retirees, offering free legal assistance to debtors (www.vlpnet.org).

Healey’s office typically sends a letter to debtors before their scheduled date in court to tell them of the available assistance. The letter is notable for its plain English approach. Here’s how the letter begins:

“This is the office of the Massachusetts Attorney General writing. Don’t worry, you’re not in trouble. We’d like to help you!”