Credit card debt is a serious problem for a lot of people. Not only does credit card debt often lead to the possibility of declaring bankruptcy, but it can even get you into a lawsuit. Credit card companies are legally able to file suits against anyone who refuses to pay their due amount.
If you are sued by a credit card company, it is important to talk with an attorney and get the right information on how you can protect yourself. There are a few reasons why a credit card company might sue.
1. Breaking Contract: If they believe that you violated terms in your contract, a lawsuit is possible.
2. Debt Collection: Companies often do not collect your credit card debt themselves. If they see that someone is not willing to pay, they pass the case over to a debt collection agency. This agency files the claims and potential suits on the credit card company’s behalf. They often give you multiple chances and possible deals in order to pay back as much of the debt as possible.
If you file for chapter 7 or 13 bankruptcy and there is a pending credit card lawsuit, it is often automatically stayed. Creditors are not allowed to continue their debt collection pursuits, because the bankruptcy case will deal with most of these situations.
Lawsuits are almost always dismissed in chapter 7 bankruptcy, because the trustee in charge of your finances determines how much of the credit card debt you can pay. Even if you cannot pay the whole amount, the case goes away because you have made every attempt to repay this money through bankruptcy.
Chapter 13 bankruptcy is a little more complicated and often includes new agreements with creditors, such as credit card companies or debt collection agencies, to pay your dues. This involves monthly amounts you must pay in order to stay current with the debt. Most repayments are stretched out to three or five years.
Lawsuits are dismissed when the repayment plan is created, but failure to make those agreed payments could put you at risk of a new lawsuit. In addition, it is not possible to get a suit discharged if it is indicating fraud. While bankruptcy covers your debts, it does not cover any fraud you may have committed against the credit card company.
If you are worried about a lawsuit, or already got served with papers, it is time to speak with a bankruptcy attorney at SM Law Group about your options!