Why You Should Consider Bankruptcy if You Are Facing a Creditor Lawsuit
When you are struggling with debt as a consumer, we know how difficult it can be to field seemingly constant calls and other forms of contact from creditors and debt collectors. A debtor’s anxieties often become much greater when they find out that they are facing a creditor or debt collector lawsuit. If you are in this position, it is a good time to consider filing for bankruptcy. For many debtors, a bankruptcy filing will stop the lawsuit and result in the end of the debt liability.
How can bankruptcy help you when you are facing legal action from a creditor or debt collector you owe? Our Florida bankruptcy lawyers can tell you more.
Automatic Stay Stops Legal Action Against the Debtor
Every type of bankruptcy comes with an immediate type of protection: the automatic stay. The automatic stay is a type of injunction that applies as soon as you file your bankruptcy petition, whether you are an individual or a business debtor. The injunction halts all creditor-related action.
What this means in practice is that, as soon as the automatic stay applies, creditors cannot make any collecting attempts. That includes contacting you, continuing to garnish your wages, or initiating or moving forward with a lawsuit against you. To be clear, if you are facing a creditor lawsuit, filing for bankruptcy will halt the lawsuit.
Creditors can ask the court to lift the automatic stay in some cases, but this typically occurs in cases involving secured debt rather than in cases involving, for example, credit card debt or medical debt for which a creditor might initiate a lawsuit.
Creditor Debt Can Be Reorganized or Discharged in Your Bankruptcy Case
You may be wondering: will the creditor lawsuit against me be able to get renewed at the end of my bankruptcy case? For most debtors, the answer is no.
In your bankruptcy case, you will either reorganize your debt and repay the creditor over time (according to the terms of your repayment plan in a reorganization bankruptcy), or you will be eligible to have the debt discharged (in either a Chapter 7 liquidation bankruptcy or in a reorganization bankruptcy, depending on the type of debt).
Contact Our West Palm Beach Bankruptcy Lawyers for Assistance Today
Are you delinquent on an account with a creditor such that you could soon be facing legal action from the creditor or a debt collector? Or have you recently received notice that you are facing a creditor lawsuit? As we explained above, if you are facing a creditor or debt collector lawsuit, filing for bankruptcy will stop any legal proceedings that have already been initiated against you in addition to preventing any new proceedings from starting. To find out more about filing for personal bankruptcy, you should reach out to one of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan Delaney & Eller, PLLC as soon as you can. Contact our firm today to learn more about the benefits of the automatic stay in all personal bankruptcy cases and to find out more about your consumer bankruptcy options.
Source:
law.cornell.edu/uscode/text/11
