The number of cases in which consumers have been sued over seriously late credit card debt is on the rise again, according to a report from the San Jose Mercury News. In particular, these cases often come from debt collections agencies, which are taking advantage of automated systems to process a greater number of lawsuits.
However, lenders are less likely to file suits even as the numbers have increased for most companies, the report said. Instead, they try to work with troubled consumers to sort out defaulted credit card debt through lower interest rates or extended deadlines.
"We use litigation on a select basis," Chase Card Services spokesman Paul Hartwick told the newspaper. "Credit-card losses and delinquency rates have been at or above historically high levels, and that has resulted in a higher number of debt collection lawsuits."
Most debt collections agencies will purchase severely delinquent credit card debt from lenders who believe the balance is uncollectable, and aggressively pursue even a portion of it from the financially troubled consumer to turn a profit.