Receiving a lawsuit from a credit card company or debt collector can be frightening. Ignoring it, however, can make the situation worse.
If you have been sued over credit card debt in Oklahoma, bankruptcy may be one option for stopping collection activity and addressing not only the lawsuit but your other qualifying debts as well.
Can Bankruptcy Stop a Credit Card Lawsuit?
When most Chapter 7 or Chapter 13 bankruptcy cases are filed, the automatic stay takes effect.
The automatic stay generally prohibits creditors from continuing many efforts to collect debts that arose before bankruptcy.
That can include many credit card collection lawsuits.
There are exceptions, so you should have a bankruptcy attorney review the lawsuit and underlying debt.
What Happens If I Ignore the Lawsuit?
Ignoring a debt-collection lawsuit does not make it disappear.
A creditor may obtain a judgment if the lawsuit is not properly defended. Depending on applicable law and the circumstances, a judgment may lead to additional collection efforts such as wage garnishment, bank garnishment or judgment liens.
That is why it is usually better to evaluate your options when you receive the lawsuit rather than waiting for collection activity to begin.
Can Chapter 7 Eliminate Credit Card Debt?
Ordinary credit card debt is frequently dischargeable in Chapter 7 bankruptcy.
However, there are exceptions. For example, allegations involving fraud or certain recent charges or cash advances can create additional issues.
Your attorney should review recent credit card activity before the bankruptcy case is filed.
Should I File Bankruptcy Because of One Lawsuit?
Not necessarily.
A bankruptcy attorney should look at your entire financial situation.
If you have a $3,000 lawsuit but no other significant financial problems, bankruptcy might not be the best solution.
If the lawsuit is one of several problems involving credit cards, medical bills, personal loans, garnishments or other debts, bankruptcy may offer a more comprehensive solution.
What If the Creditor Already Has a Judgment?
A judgment does not necessarily mean it is too late to file bankruptcy.
Many debts that have been reduced to judgment may still be dischargeable.
Judgment liens and certain other consequences of a judgment require additional analysis, however. Do not assume that bankruptcy automatically removes every lien merely because the underlying personal liability can be discharged.
Frequently Asked Questions
Does bankruptcy make a credit card lawsuit disappear?
Filing bankruptcy generally stays many collection lawsuits. Whether the underlying debt will ultimately be discharged depends on the nature of the debt and circumstances of the case.
Can a credit card company garnish my wages in Oklahoma?
A creditor that obtains a judgment may have collection remedies available under Oklahoma law. If a lawsuit is pending, getting advice before the creditor reaches the garnishment stage can be important.
Can I file bankruptcy after losing the lawsuit?
Possibly. Entry of a judgment does not automatically prevent the underlying debt from being discharged in bankruptcy.
Should I still respond to the lawsuit?
Do not ignore court deadlines based solely on an intention to file bankruptcy. Until a bankruptcy case is actually filed and applicable bankruptcy protection exists, you should assume deadlines remain important.
Free Bankruptcy Consultation in Tulsa
If a credit card company, debt buyer or collection agency has sued you in Oklahoma, use the lawsuit as a reason to evaluate your entire debt situation.
Brown Law Firm helps consumers in Tulsa and throughout Oklahoma determine whether Chapter 7 or Chapter 13 bankruptcy provides a better solution than continuing to fight individual creditors one at a time.
Contact Brown Law Firm for a free bankruptcy consultation. We can review the lawsuit and your overall financial situation and explain your bankruptcy options before you decide whether to file.
