What to Do if You are Being Sued by a Credit Card Company

credit card

If a credit card company or some other type of creditor files a lawsuit against you, garnishes your wages or bank account, or takes collection actions, a Georgia bankruptcy attorney can help you stop that process by filing for bankruptcy. An automatic stay protects debtors while they get help from the bankruptcy court to sort out their financial situation

How to Get an Automatic Stay on Creditor Lawsuits by Filing for Bankruptcy

Getting a stay on lawsuits and other collection actions typically involves two steps:

  1. File for bankruptcy.
  2. File a Notice of Bankruptcy in the court where the credit card company sued you.

The judge in the credit card lawsuit will know not to take any further action in the case until the bankruptcy case is complete. The creditor will not be able to get a judgment against you unless the bankruptcy court gives them permission to do so.

Secured and Unsecured Debt

Credit card debt is “unsecured” debt. There is no physical item that secures the payment of the indebtedness. Mortgages are “secured” debts because the house secures the payment. The mortgage lender can foreclose on the house to collect what the buyer owes if the buyer stops paying the mortgage. 

Unsecured debts often get discharged in bankruptcy, meaning that the court says that you do not have to pay the unsecured debts. You must follow all of the rules of the bankruptcy court to get debts discharged. For example, you have to list all of the debts on the papers you file with the court and provide proper notice to all your creditors, so they have the opportunity to contest the discharge.

Pre-Existing Judgments

If a creditor already got a judgment against you before you filed for bankruptcy, the creditor has a judgment lien. In a bankruptcy case, you can ask the judge to enter an order that says your earnings and assets are no longer subject to that lien. If the judgment creditor has started a garnishment, you can usually stop the garnishment. You might be able to get back some of the money the creditor garnished

Check the Statute of Limitations

If you get sued by a credit card company for an inactive account with no usage, payments, or other activity for at least six years, the credit card company cannot take legal action against you. Sometimes a collection agency will reach out to a debtor, saying that they want to set up a payment schedule or try to resolve the debt. Responding to the agency or the credit card company could restart the clock, giving them another six years to sue you for the balance due

You should not ignore it if a credit card company contacts you or files a lawsuit against you, even if the six years expired. The creditor could get a valid judgment against you by default if you do not take part in the lawsuit and raise the defense of the deadline, also called the statute of limitations.

A Georgia bankruptcy attorney can protect your rights and advocate for you if you get sued by a credit card company or another type of creditor. You only have a matter of days to respond to a lawsuit or another kind of creditor action before serious consequences can happen, so be sure to talk to a lawyer right away. Contact us today.

Posted in: Bankruptcy