You will know that you have hit credit repair bottom when you start getting harassing calls and threats from your lenders because of defaulting on your debts. These days, more and more creditors are taking their approach a notch further with lawsuits that arise against consumers for not paying on their unsecured credit owed like those of balances on credit cards. You need to know when, why, and how creditors might come after you because of past due amounts owed so you can help yourself get out of trouble.

So you can quickly act double time on bad credit repair, you need to know that you will be sued when your original creditor proves that you owe money. This typically happens when the original creditor supplies a signed document such as a credit card contract that may prove that you owe the debt in question. According to the Fair Debt Collection Practices, do not worry when a third party collector threatens for a legal recourse because this action is illegal.

When the court allows your creditor to be able to seize your paycheck to be garnished, this means that you will have payments for the debt deducted from your salary. This can be as much as 25% of your take home income each time you receive a paycheck from your work. There are even reports that state that garnishments even jumped up to 30% and borrowers struggled dearly because of it. Even unpaid student loans can also go down this path.

Creditors also start to bring the interest rates higher and they even enact other miscellaneous fees in an effort to try and regain whatever possible losses they may incur – this is when a court rules in favor of your creditor. This is something that you certainly wouldn’t want to happen because your interest rates can hit sky-high. Plus you can also incur more fees when you need to hire lawyers to represent you in court. You need to do your own homework and learn about your legal rights when dealing with creditors and bad credit repair.

Even without taking you to court and depending on your location or place of residence, your state law may allow any of the above actions or other aggressive collection tactics from your creditors. Good thing that when you are online, you can get state-specific overviews to help you learn more about debt laws that apply to you.

Lastly, if you are unresponsive to the collection efforts of your creditors and do nothing about it, this can translate to making you an easy target for your creditors. Instead of avoiding it, the actual best way to deal with debts on default is to participate in the process and be part of it. But bear in mind first that you also have rights to against self incrimination so you should stay away from certain activities. You can bring the odds to your favor if you are able to show that you have attempted to negotiate a payment plan or reported creditor harassment.

Author's Bio: 

Rachel Schwartz is the Marketing Manager of BHM Financial - one of the most trusted names in the bad credit loan industry. This company may be able to help you reach your financial goals. Please visit our Bad Credit Loan website or our Blog and find out today.