A credit card company might file a lawsuit against its customer to obtain a lien against any of the assets to recoup its dues. This lawsuit usually can only be prevented by filing for bankruptcy under chapter 7 or chapter 13. Credit card companies want to recover their investment by all means and filing a lawsuit to recover is one of them. Apart from obtaining a lien on the asset that makes it difficult for the debtor to sell or preserve the asset during the bankruptcy process or otherwise, the suit can have a significant impact on the credit score of the borrower.
If the credit card suit isn’t valid and identity theft by someone or misuse of your information by someone has created the debt, there is a possibility of winning the lawsuit. In such scenarios, there is absolutely no need to panic or worry about the lawsuit as you might end up winning the same, and discharging the debt occurred as well. If this is not the case, it is best advised to seek an out-of-court settlement by coordinating with the credit card companies or it will only add legal costs, attorney costs, and other costs unnecessarily.
If you apply for bankruptcy
Apart from an out-of-court settlement, which might not be very obvious or possible in certain situations, the other alternative to evade or stay credit card company lawsuit is bankruptcy. Bankruptcy can stay any foreclosure, attempt to seize, or recollect any debt, threatening, harassment, etc., which is a much-needed relief when credit card companies are behind you with a lawsuit. To know more about how pros and cons of bankruptcy and whether you should be applying for the same or not, log on to https://recoverylawgroup.com/bankruptcy/.
Once bankruptcy is filed based on merit, especially under Chapter 7, the filer can avail of unsecured debt discharge almost in full. After the liquidation of assets under Chapter 7, the first preference is given to the basic liabilities and the secured debts. If any proceeds of liquidation still remain, it is used to settle debts of credit card companies or unsecured debt lenders. Under Chapter 13, usually, the discharge of unsecured debt is limited as a restructured plan is created to accommodate maximum debts based on future income. There might be some release of debt from the credit card lenders however, it might vary on a case-to-case basis.
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It’s not an easy situation to be in a financial mess and handle lawsuits from credit card companies. You might need well-equipped and experienced attorneys to guide you out of a tricky situation. In case, fraud or misrepresentation, or an attempt to manipulate credit card companies were made to avail credit unfairly, the lawsuit cannot be prevented by bankruptcy as well. The debtor will be fully liable for the exposure of the debt and criminal proceedings including penalties and imprisonment in such scenarios. If you need to clearly understand all this and more from Los Angeles & Dallas, TX expert attorneys, dial 888-297-6203 and resolve your queries instantly.