Stop Creditor Lawsuits Via Bankruptcy

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Are you facing a lawsuit over unpaid credit card debt? Did you know that filing for bankruptcy can halt the lawsuit against you? At the Law Office of R. Morgan Holland, L.C., we take great pride in helping clients tackle unmanageable debt and secure a fresh financial start through bankruptcy. Below, our experienced legal professionals explain why filing for bankruptcy might be your best option to stop a credit card company's lawsuit.

How Creditor Lawsuits Work

If you fail to pay your credit card bill and other types of debt, then your creditors can file a lawsuit and obtain a judgment before initiating other methods to procure payment for the debt, such as garnishing your wages or bank account. Creditors can also put a lien on your property if they obtain a money judgment from the court. Liens can be difficult to eliminate during the bankruptcy process, which is why it is important to review and make sure you understand all of your options before the court rules against you.

How Can Bankruptcy Stop a Creditor Lawsuit?

As soon as you file for bankruptcy, courts issue an order called the automatic stay that prohibits most creditors from initiating or continuing debt collection actions against you. This includes lawsuits filed against you by creditors. So if a credit card company already filed a debt collection lawsuit against you, it must pause while the automatic stay is in effect. Bankruptcy courts can lift the automatic stay at the creditor's request, however, credit card companies must prove they have legal grounds to win this type of motion.

How to Stop a Lawsuit From a Creditor Without Bankruptcy

There are a few ways to stop a lawsuit from a creditor - you may negotiate the debt or fight the lawsuit if you believe that the debt is not legitimate. Below, we go into more detail regarding these strategies.

If you suspect that a creditor will file a lawsuit against you, you have the option of negotiating the debt. Reach out to them, explain your situation, and request if the repayment plan may be negotiated. If they grant it, be sure that the agreement is put into writing. You may also request that the creditor stop pursuing a judgement against you or that no further actions will be taken as long as you keep up your end of the contract -- this should be included in writing.

If you believe that the lawsuit was incorrectly filed because the debt is not legitimate, you have the option of fighting it. Respond to the Summons and Complain by providing an Answer to the court. In the Answer, you request the validity of the debt from the creditor. By doing this, they will be required to prove the amount owed, that the statute of limitations has not expired and that they are legally authorized to collect the debt. If they are unable to do this, then they cannot file a lawsuit.

Does Bankruptcy Eliminate My Credit Card Debt?

Liability for the unpaid credit card debt can be eliminated and the lawsuit against you can be dismissed with a successful bankruptcy discharge. However, if the bankruptcy court dismisses your case without a discharge, the lawsuit against you will continue from where it was paused when you initially filed for bankruptcy. It’s also important to note that a bankruptcy discharge doesn't automatically eliminate a lien on your property.