How to handle Collections Lawsuits and Bankruptcy
When you get behind in your debt, you will probably start receiving phone calls and letters attempting to collect. If a creditor threatens to sue you to get the money you owe, there are a few things you should know.
Sometimes Just a Threat
Often a threat of a suit is as far as it will go. Just because the creditor threatens to sue does not mean they will follow through with the action. The threat is intended to scare you into paying back the money they have no other way to collect from you.
If you do end up getting sued, it is vital that you file a response to the court before the deadline. This is an excellent time to contact a bankruptcy lawyer if you are behind in other debt as well. The bankruptcy will stop all legal actions against you by the automatic stay that goes into effect as soon as you file your bankruptcy papers with the court
Don’t Ignore the Lawsuit
Ignoring the lawsuit will not be in your best interest; it could have negative consequences. If you have a defense for the lawsuit that you don’t owe any money to the creditor or the amount is in dispute, raising this defense in court can help you win the suit and make it go away.
If you lose a lawsuit, the creditors can obtain a judgment to include garnishing your paycheck or getting a lien on your home. You have to make payments to the court, and then the money will be distributed to the creditors.
Filing bankruptcy will give you more rights on how to deal with the debt. Sometimes you can have the debt completely wiped away. If you would like more information on what debts can be eliminated in bankruptcy, or if you are worried you are about to be sued, contact a Columbus bankruptcy attorney.
“Telling creditors you might have to declare bankruptcy can help minimize their threats. Most creditors prefer to get paid some of the debt versus none at all.” Source: https://www.investopedia.com/articles/pf/09/fighting-collection-lawsuits.asp#:~:text=A%20collection%20lawsuit%20occurs%20when,collect%20an%20alleged%20debt%20repayment.