Credit Card Lawsuits in Bankruptcy

Credit card lawsuits are brought by your creditor to try to collect debts when you aren't paying. Credit card lawsuits are a very unpleasant thing for you to deal with and if you find yourself facing legal action from a creditor, you may want to consider bankruptcy as an option. 

Understanding Credit Card Lawsuits

When you borrow money, you are legally bound to pay it back. If you don't, creditors can take action against you. Secured creditors- like the bank that holds your mortgage loan- usually have an easier time of coming after you. The bank or car loan lender can, for example, simply foreclose on the house or repossess the car to get their money back.

For unsecured debt, like credit card debt, the only option the creditor usually has is to file a lawsuit against you. When this happens:

• They'll have to prove you owe the debt and aren't paying it
• They will be able to get a judgment against you from the court
• If you can't pay the judgment (the amount due) immediately, then the creditor may be able to take additional action to get your wages garnished or to get a lien placed on your property. If you have your wages garnished, this means money comes directly out of your paycheck before you ever even see it

How Bankruptcy Can Help

Bankruptcy can help you avoid a credit card lawsuit because as soon as you file, an immediate stay is placed that prevents creditors from being able to sue you or take any other collection actions. Bankruptcy can also help because it provides you with a solution for dealing with unsecured debt. The actual solution depends on which chapter of bankruptcy you file:

• For a chapter 7, you will have debts discharged but you will also have to give up assets. Not everyone qualifies for a chapter 7, as you must make below a certain income
• For a chapter 13, you get to retain possession of all of your assets, but your debts aren't simply discharged- instead, a repayment plan is required and you must pay back some of your debt over a 3-5 year period of time. 

Getting Help

To deal with your credit card debt, you should strongly consider contacting a lawyer. An attorney can help you explore all your options, including bankruptcy, and decide on the best choice for your situation. He can also help you to deal with any lawsuits or other actions taken by your creditors in an attempt to collect the debts you owe.