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FILE FOR BANKRUPTCY IN HAUPPAUGE TO STOP CREDIT CARD LAWSUITS

When a credit card company files a lawsuit against a debtor, the debtor must act quickly to stop the lawsuit. If the credit card company obtains a judgment against the debtor, they can place a lien on any property owned by the debtor, making it difficult to sell or transfer. It also significantly harms the debtor’s credit rating, making it difficult to obtain new credit.

When a credit card company files a lawsuit against a debtor, the debtor must act quickly to stop the lawsuit. If the credit card company obtains a judgment against the debtor, they can place a lien on any property owned by the debtor, making it difficult to sell or transfer. It also significantly harms the debtor’s credit rating, making it difficult to obtain new credit.

Debtors can sometimes negotiate with credit card companies to have the lawsuit dropped in exchange for paying a portion of the debt or making payments on an installment plan. However, if the debtor did not take such steps prior to the lawsuit being filed (and credit card companies usually provide plenty of opportunities to do so), the credit card company may decide that the judgment and, as a result, a lien on the debtor’s property are required to ensure payment.

In many cases, the only way to stop a credit card lawsuit is to file for bankruptcy. When a debtor files for bankruptcy, whether Chapter 7 or Chapter 13, an automatic stay goes into effect, requiring all creditors to cease collection efforts. This includes any credit card or other debt lawsuits that are currently pending. Such lawsuits cannot be resumed until the bankruptcy is lifted.

In Bankruptcy, What Happens to Credit Card Lawsuits?

The ability to stop a credit card lawsuit is not the only advantage of filing for bankruptcy when dealing with credit card debt. The debt will most likely be completely discharged at the end of the bankruptcy process. What happens to the lawsuit and debt depends on the chapter of the bankruptcy code under which the debtor files.

If a debtor files for bankruptcy under Chapter 7, his or her assets (except those protected by exemptions) will be liquidated and the proceeds distributed among the debtor’s creditors. Credit cards are among the lowest priority debts because they are unsecured, and other creditors will be paid first. If any money remains after paying higher priority debts, such as taxes or delinquent child/spousal support payments, the credit card company may receive a portion of the proceeds. However, any remaining credit card debt will be discharged after that. The credit card company must drop the lawsuit and can no longer pursue the debtor.

If the debtor files under Chapter 13, he or she will enter into a three to five-year repayment plan. Throughout the plan, the debtor will make payments to the bankruptcy trustee, who will then distribute the funds to creditors. Again, because unsecure credit is considered low priority, credit card companies are likely to receive little or no payment unless higher priority debts are paid off first. When the repayment plan is completed, any remaining credit card debt will be completely discharged, just like in Chapter 7 bankruptcy. If the debtor does not complete the repayment plan, the automatic stay will be lifted, allowing the credit card company to resume the lawsuit and any other collection efforts.