Credit Cards

• Credit card debt covers a range of indebtedness with different interest rates and different terms. Department and home improvement store credit cards let consumers purchase merchandise from their stores on credit. Consumers use bank cards -- such as Visa, MasterCard, Discover and American Express -- for virtually any type of merchandise and services. Most bank cards also offer cash advances, and they charge higher interest rates for borrowing cash than for making purchases.
  
  

Collections

• When a credit card customer falls 60 days or more behind in her payments, the creditor's collections department reviews her account and contacts the debtor to find out why the payments are late. If the debtor cooperates, the creditor will often work with the debtor to catch up the late payments and get the account back to current payment status. If the debtor does not cooperate or does not make the agreed-upon catch-up payments, the creditor may take more serious collection action, such as suing the debtor.
  
  

Litigation

• According to Bankrate.com, a credit card company will indeed sue a debtor over a debt of less than $10,000. Some creditors file suit in small claims court to save on legal expenses. In some states, as of the time of publication, a creditor can file suit in small claims court to collect balances ranging from $1,500 to more than $10,000. As an alternative to litigation, a creditor may also assign a past-due account to a collection agency. The collection agency can then sue to recover the debt, even if it is less than $10,000. Most creditors add the cost of collection, including legal fees and court costs, to the amount the debtor owes.
  
  

Negotiation

• A debtor may be able to negotiate a settlement even after a creditor files a collection lawsuit against him. A debtor can try to negotiate a deal where the creditor accepts a substantial amount of the debt as payment in full. A debtor may also attempt to negotiate a settlement where the creditor accepts monthly payments. However, by the time a creditor files suit against a debtor, it may be too late to settle the case by making payments.