What should I do if Target is attempting debt collections on my account?
Target is one of the nation’s most popular retailers, and its REDcard credit cards are some of the most popular retail store branded credit cards available. Retail store credit cards are particularly enticing for consumers, as they often promise excellent rewards. But if a payment or two are missed, it results in costly penalties. It’s no different with the REDcard. Target offers a five percent discount on all purchases made with the REDcard, but like with any credit card, interest rates can be crippling. The interest rate on the REDcard is variable, but can run up to 24 percent, which means if a cardholder misses a single monthly payment, they are getting nothing from that five percent discount. The REDcard also offers extremely low minimum payments, which seems like another perk at first glance, but it often ends up being a trap, encouraging people to rack up much more debt than they can handle.
The REDcard is a Target-exclusive product, but it is serviced through TD Bank USA. TD Bank is largest bank in Canada and, by assets, it is the 11th largest bank in America. In short, Target and its REDcard have a serious financial infrastructure backing everything up. This is a problem for people swamped with REDcard debt because Target has the means to aggressively collect on it.
It’s important to note that though Target positions itself as a consumer-friendly brand, TD Bank has a less sterling reputation among consumers. TD Bank has been slammed by a massive data breach that affected about 267,000 of its customers. The breach was due to poor data security and was something that TD Bank did not own up to right away. TD Bank has also been the subject of a pair of class action lawsuits, one that proved that the bank had shorted its customers out of $9 million total, due to inaccurate coin counting machines.
And TD Bank has not been shy in relegating debt to collectors or employing litigation in getting a cardholder to pay up. Target debt collections might be handled with TD Bank’s assistance, or the debt may be handed to a third party collector, or even sold to a debt scavenger. If litigation does come, it will be done through a local attorney, and executed by Target, a third party debt collector or a debt buyer. Here’s how to respond:
- Don’t ignore the complaint and summons – The complaint and summons can be seen as the official starting point of a lawsuit. Once the defendant receives them, they have a short window in which to respond. Very few choose to do so, and this is a major mistake. Do not ignore the summons or complaint. Answer it and assert that you intend on fighting the lawsuit. If no answer is made, Target or the debt collector will win a default judgment against the defendant. This is devastating for the defendant’s credit and exposes additional assets for collections, like business assets.
- Consider legal representation with a debt defense attorney – A debt defense attorney is a powerful ally in negotiating a settlement and employing strategies in taking apart the debt collector’s case. A debt defense attorney is particularly helpful when the debt collector is likely to make procedural mistakes in delivering its case, as a debt defense attorney can exploit these mistakes to their client’s advantage.
- Assess your opponent – There is a big difference between an institution like TD Bank USA and a debt scavenger. This may not be obvious, as the lawsuit will begin the same either way, but when a third party debt collector or buyer is pursuing a claim, there are usually more avenues of attack available to the defendant. Target and TD Bank USA do their diligence in keeping track of all account information, but a third party has to work to get that information.This is an important point, because if the debt collector cannot verify the account’s balance, payment history, or personal information attached to the account, they will not be able to sue. When a debt buyer purchases accounts, it has to also acquire the right to instigate legal action against the account holders. This is also true of REDcard accounts. If the debt buyer fails to do this, or does so but loses the documentation, then they have no legal authority to sue. This may sound anomalous, but it happens all the time in these cases.
Debt buyers and collectors pick up thousands of accounts in a single purchase, knowing that the vast majority won’t return anything, but a few will make it worth it. For this reason, debt collectors and buyers don’t want to devote time to lawsuits that are being met with resistance. The debt collector just wants to win as many default judgments as possible, so it often sues knowing that it doesn’t have the documentation it needs to back that suit. If the defendant pushes back, the debt collector often just drops the suit and moves on to the next cardholder.
- Settle when there is no other option – Settling is one of the last stops on the debt defense path. Bankruptcy can be claimed, but this has long term effects that must be weighed carefully before pulling the trigger. It is often possible to attain a favorable settlement, especially if the debt collector knows there are some potential weaknesses in their case. A debt defense attorney can leverage these small advantages and work hard to cut the amount owed, extend the payment terms, or come up with something that works for both sides. This is often difficult to attain prior to getting help from an attorney, as debt collectors are emboldened into being aggressive with defendants that don’t have professional representation.
In most ways, there’s nothing special about dealing with Target regarding debt collections. The legal process is the same and the incentives are the same. However, working with a debt defense attorney ensures those facing Target deb collections are fully prepared for what lies ahead and have an experienced lawyer fighting on their behalf.