If you have fallen behind on your bills, it won’t be long before the debt collectors begin to harass you and collection lawsuits get filed against you. If the thought of litigation scares you and if you are ready to take control of your financial like, it may be time to consider filing a Chapter 7 or Chapter 13 bankruptcy. When you file your bankruptcy petitions, the automatic stay immediately goes into effect. The stay prevents creditors and collectors from taking any further collection efforts against. Thus, any collection lawsuits that are pending against you come to a halt.
When you file a bankruptcy case, it allows the most comprehensive means for dealing with your debt. All of your creditors and all of your debts must be included in your case. In Chapter 7, you can discharge or eliminate most (if not all) of your debts. In Chapter 13, you can reorganize your debts and create a manageable payment plan that pays your creditors partially or in full.
Many collection lawsuits are filed on unsecured debts. An unsecured debt is one that does not include an asset being pledged as collateral to the lender. The two most common examples are credit cards and medical bills. In a bankruptcy filing, unsecured creditors are paid very little of what they are owed, and sometimes nothing at all! This can save a debtor thousands of dollars.
If a collection lawsuit has been filed against you when you file your bankruptcy case, the suit is put “on-hold” while your bankruptcy is pending. If the plaintiff is only seeking to recover a monetary judgment against you, you will most likely be able to discharge the debt involved in the lawsuit. Thus, once you obtain your discharge order, the lawsuit will no longer be pending against you and you will not have to pay the debt.
There are some lawsuits that are not halted by the automatic stay. Certain criminal matters and child custody suits are common examples of lawsuits that may continue even after you have filed for bankruptcy. If you are a party in litigation and you are considering filing personal bankruptcy, it is essential to confer with an experienced bankruptcy attorney to understand how your suit will be impacted.
At The Law Office of Diane Anderson, our lawyer has faced Chapter 7 bankruptcy. She understands the anxiety and fear that accompanies working through this process. But, after coming out on the other side, she started her own law firm and is living a life with less worry and strife. Contact us today to get the help and guidance you need in order to take control of your finances.