When hard times hit and you are unable to pay your bills, it doesn’t take long for creditors to start pursuing you for payment. After a few demand letters and telephone calls, many creditors file collection lawsuits. We understand that this can feel overwhelming and we want to help. Depending on your individual financial situation, filing a personal bankruptcy case may the answer to getting the debt relief you need.
How does filing Chapter 7 or Chapter 13 help? As soon as your bankruptcy petition is filed, the automatic stay goes into effect. The stay prohibits any further collection activity against you, including collection lawsuits. In other words, creditors cannot file collection lawsuits against you and cases that are already filed must come to a halt while your bankruptcy is pending.
If the lawsuit filed against you is an action to obtain a monetary judgment, it will be put on-hold. If there are other causes of action that are not related to the creditor obtaining a monetary judgment, they may be allowed to proceed. Common examples of lawsuits that can proceed while your bankruptcy case is pending include criminal matters and child custody suits. In a collection matter, however, you may be able to eliminate or discharge the debt involved in the lawsuit, which means when you emerge from your bankruptcy case, the lawsuit will no longer be pending against you and you do not have to repay the debt. Your personal liability to pay discharged debts is eliminated in a successful Chapter 7 or Chapter 13 filing.
A personal bankruptcy can also be an effective way to comprehensively deal with your debt. ALL of your creditors must be included in your filing, so when you obtain your discharge order, it is truly a fresh financial start.
If you have one or more lawsuits filed against you and you are wondering how filing for bankruptcy protection could benefit you, contact the attorneys at Faro & Crowder, PA, for a free initial consultation.