Credit Card Lawsuit and the Automatic Stay
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Credit Card Lawsuit

If you’re struggling to make ends meet, you’re probably under lots of stress from debt collectors and may be trying to figure out whether you might find relief from options like bankruptcy protection. And, if one of your creditors threatens you with a lawsuit, your debt can go from stressful to scary.

A credit card debt lawsuit may be the culmination of a long struggle with debt. But the lawsuit may only increase your pain, as credit card companies may use them to garnish your paycheck or try to take money from savings or retirement accounts.

To speak with a lawyer right now about your rights regarding credit card lawsuits, please fill out this form. You can get a free case evaluation with a bankruptcy lawyer near you.

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Credit Card Lawsuits: How to Fight Them

So how do credit card lawsuits work? Here’s a look at the process involved when any creditor (credit card issuer or otherwise) turns to the courts to collect on a debt.

  • You fall behind on payments: If you’re like most people with cash flow problems, you’ll probably prioritize payments to your landlord or mortgage lender and utility company over your credit card issuer. And, if that means that you don’t make payments on your credit card debt for a few months, that decision could lead to a lawsuit.
  • The creditor or its debt collector files a lawsuit against you: One important thing to know is that either the credit card company or a debt collector that company has hired to collect on debts can file a lawsuit against you. The goal of the lawsuit is to legally obligate you to pay whatever you owe.
  • The lawsuit requests a garnishment order: On the legal side, a credit card lawsuit works by asking the court to rule that you owe a debt. Then, they ask the court to give legal permission to your employer or bank to release money from your wages or account to cover the debt. Wage garnishment may be a devastating result for someone already struggling to stretch their paycheck.
  • You answer the lawsuit: The Federal Trade Commission strongly recommends that consumers do not ignore court summons about debt-related lawsuits. Why? Because appearing before the judge is your chance to plead your case and may be your only opportunity to avoid wage or bank account garnishment.
  • The Bankruptcy Automatic Stay: This powerful court order could be the life preserver you need. The Automatic Stay puts an immediate end to collections, including lawsuits and wage garnishment. It is designed to kick in once you file bankruptcy. So even if a lawsuit or garnishment is already underway, you may still be able to protect your income and resolve your debt.

Responding to a Credit Card Lawsuit

So what can you do if you receive notice that a debt collector or creditor has filed a lawsuit against you? The FTC recommends responding within the time indicated on the notice you receive:

  • Contact a lawyer: If you aren’t well versed in consumer rights and debt collection laws, you may want to connect with a lawyer for legal advice. A lawyer can help make sure you meet all deadlines and file any paperwork correctly. At the same time, a lawyer may look at your situation and offer advice on the best way to proceed. How should you respond to the lawsuit? What are the best legal options for you? That's why you should ask questions, get answers and ...
  • Know your options: As described above, filing bankruptcy may help you stop a lawsuit and wage garnishment. You may be able to completely wipe out credit card debt in bankruptcy under Chapter 7, or repay it over time in a Chapter 13 reorganization plan. A local attorney may look at how the laws apply to your case.

Connect with a Bankruptcy Lawyer Today

If you’re ready to fight a credit card lawsuit head-on, now is the time to connect with a bankruptcy lawyer practicing near you. For a free case evaluation with a local bankruptcy lawyer, simply complete the free form on this page and we'll connect you right away.

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