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Credit Card Debt Lawsuit

If you've been hit with a credit card debt lawsuit, it may have been a wake-up call that your finances are no longer manageable. But how should you proceed? Is there any way to save your finances? Is there any way to stop the lawsuit?

You may be surprised to learn that bankruptcy may help you get back on top of your finances and end your creditor's claims against you.

If you're ready to ask these and other questions directly to a bankruptcy lawyer, simply fill out the case review form below to connect with a lawyer today for a free case evaluation.

Bankruptcy Could Help With Your Credit Card Lien or Lawsuit

The good news if you're facing charges from a credit card company is that filing for bankruptcy may help ease your financial woes and offer you a form of debt relief assistance. Here's how.

  • The power of the automatic stay: This protection takes effect as soon as you file your petition with the bankruptcy court. The automatic stay prevents collection of any kind, typically for the duration of your bankruptcy case, including foreclosure, repossession, wage garnishment and debt-related lawsuits.
  • The repayment plan: If you choose to file under Chapter 13 of the U.S. Bankruptcy Code, your bankruptcy case will remain active for three to five years, during which time you’ll make monthly payments according to a repayment plan. The money you pay will go to your creditors and can allow you to catch up on your past-due debts (while staying current on other debts).
  • Straight bankruptcy: If you are eligible and file under Chapter 7 of the Bankruptcy Code, you could get a debt discharge in as little as four to six months. Chapter 7 bankruptcy works differently than Chapter 13: filers are not required to make repayments to creditors. Instead, the court offers them a full discharge of some or all of their eligible unsecured debts.
  • The debt discharge: At the end of either a Chapter 7 or Chapter 13 case, certain debts may be discharged. Debts are ranked according to their payment priority, with top priority given to secured debts (those attached to property), student loans, alimony, child support, criminal fines and tax debts. High-priority debts cannot be discharged in bankruptcy, but low priority debts (including credit card debt) are often forgiven at the end a successful bankruptcy case.
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What Are the Limits on Credit Card Debt in Bankruptcy?

Though bankruptcy courts often discharge credit card debts, there are some restrictions on this practice. Credit card purchases of luxury goods made within 60 days of a bankruptcy filing or made after meeting with a bankruptcy lawyer are often non-dischargeable. However, if you are facing a lawsuit from a credit card company or debt collector, odds are the debt is old enough to be eligible for discharge in bankruptcy.

Credit Card Debt Statutes of Limitation

If you racked up credit card debt several years ago, but creditors are just now knocking on your door, chances are they’re acting too late to recover their money.

Statutes of limitation, which vary by state, prevent creditors and debt collectors from seeking repayment of credit card bills after a certain period of time. According to the Federal Trade Commission, most states set this time limit between three and ten years.

Here are a few things to remember about credit card debt and statutes of limitation:

  • Debtor must act. Statutes of limitations must usually be invoked in court by the debtor to come into play. They do not work automatically. So, every debtor should know their state’s credit card debt laws.
  • Fuzzy legal issues. While state laws may describe one time limit, prior cases may have altered this rule. Consulting a local attorney may help your sort out your state’s bankruptcy law.
  • Jurisdiction limits. Creditors must file collection suits in the area where you signed the contract or where you live. Suits filed outside these areas may be dismissed.

Remember, if a credit card company has filed a collection action against you, there are a number of legal obstacles the company must first overcome.

Creditor Schemes to Avoid Credit Card Debt Laws

Since these statutes of limitation often have harsh consequences for creditors, they frequently search for loopholes to catch innocent credit card users.

For example, the clock on the statutes of limitation may restart if you make a small payment on an old debt. In fact, the clock may even restart if you simply acknowledge an old debt.

As a result, be careful about acknowledging old debts if you receive calls from credit card companies or collection agencies. If debtors receive calls from creditors about old debts, they may simply ignore the call and send a letter claiming they are not aware of the debt in question.

For more information on your state’s credit card laws, contact a local bankruptcy lawyer today.

Where Can I Learn More about Credit Card Debt Lawsuits?

If you're interested in finding out whether filing for personal bankruptcy might be the solution you need for a credit card debt lawsuit, you can connect with a bankruptcy lawyer practicing in your town. During a free consultation with your lawyer, you can ask questions specific to your circumstances and find out more about how bankruptcy might be able to help you. Simply fill out the case review form below to get started now.

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