Filing Bankruptcy After You Are Sued By A Credit Card Company

When it comes to filing bankruptcy after you are sued by a credit card company, there are several things that you need to take into your careful consideration. Though filing a petition will definitely help you to stop the lawsuits, it is not always the best way to do. You are strongly recommended to work on better alternatives before you decide to go for bankruptcy protection. It is very important for you to keep in mind that bankruptcy stays on your credit report for around seven to ten years, which means you will have to go through a tough time while trying to bring your finances back on track. The journey financial road followed by a bankruptcy is a very difficult one. Bankruptcy, therefore, must always be used only as a last option, when there are no better alternatives available to you. However, in extreme cases, when there is no way you can handle your debts, bankruptcy also turns out to be the most powerful option. As soon as you file a petition for it, all lawsuits that have been filed against you are stopped because of the ‘automatic stay’ issued by the court. When the court accepts your petition, they issue an order for automatic stay and send the copies of that order to all your creditors, informing them that you are seeking bankruptcy protection and so they must immediately stop all their collection practices (which include lawsuits) as long as the bankruptcy case is pending with the court.

Get Pre-Bankruptcy Credit Counseling

If you are considering filing bankruptcy after you are sued by a credit card company, the first thing you have to do is to contact a credit counseling agency and get your debt and financial situation thoroughly reviewed. Make sure that the agency you are signing up with is duly approved by the US trustee program. You can obtain a list of government-approved credit counseling agency by contacting the US department of justice (DOJ). The easy way to do this is to visit their official website, as you can access the list there quite easily, right from the comfort and convenience of your home.

Discuss The Lawsuit

While you are having a meeting with the credit counselor, do not forget to discuss the lawsuits filed by your creditors. Filing bankruptcy after you are sued by a credit card company may seem like the best option to you, but your counselor may have different ideas. Since they are professionals in this field, they might be able to offer you some better alternatives to stop the lawsuit. If there is an alternative that is less damaging to your credit and can help you deal with the situation very well, you must go for it. There can be an array of possible alternatives available out there. For example, the counselor may ask you to allow them to negotiate a better payment plan with your creditors on your behalf. In extreme cases, the counselor may even be able to negotiate a debt settlement deal, as per which, you may get an opportunity to settle your entire debt by paying a reduced amount of money than the actual outstanding balance. If such negotiations work, there is no need to file for bankruptcy to stop the lawsuit. The lawsuit will automatically be dropped as soon as your credit card company agrees to work on a new repayment plan or on a debt settlement program.

Certificate From Counselor

After a thorough review of your financial situation, if even the counselor thinks that Filing bankruptcy after you are sued by a credit card company is the right option for you, you will need a certificate from them to determine whether you qualify to file your petition under chapter 7 or chapter 13. For this, you will have to go through a formal, pre-bankruptcy counseling session. The session can be as short as half an hour or as long as ninety minutes, depending upon the various factors involved in your specific case.

Determine If You Pass The Means Test

The US bankruptcy laws also require you to pass the means test before you go ahead and file your petition. The means test will help you understand where you actually stand with your finances. For example, if your monthly income is more than the median income of the residents (with same family size) of your state, it means you can still be able to pay off the debts provided the repayment terms are made a little more favorable to you. In this case, you will have to file for bankruptcy under chapter 13, where the court will simply restructure the payment plan to make it more affordable to you. However, if your income is less than the median income of your state, the court will consider you as a hopeless case, where you cannot make the payments toward your debt. In such cases, the court will liquidate the majority of your assets and properties (except the pones that are exempted under the law) in order to settle your debts with the proceeds thus received – this is called chapter 7 bankruptcy.

It is also very important to note that when you are filing bankruptcy after you are sued by a credit card company, you will have to pay a certain amount of money as filing fee. At present, the fee is $299 for chapter 7 and $274 for chapter 13 petition.

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