Can Bankruptcy Stop a Credit Card Debt Lawsuit in NJ?
Explore how filing for bankruptcy in New Jersey may halt credit card debt lawsuits with the Law Offices of Wenarsky and Goldstein, LLC.
Does Bankruptcy Halt Credit Card Lawsuits?
Credit card debt is a major issue for many people in the United States. With the ease of swiping a card and the temptation of buying now and paying later, it’s easy to accumulate more debt than one can handle.
When a customer is unable to pay their credit card debts, the credit card company may initiate a civil lawsuit to recover the debt, especially if all other debt recovery measures have failed.
A credit card lawsuit judgment can lead to a judgment lien over your property, wage garnishment, or bank account seizures, making it hard to meet daily expenses. Defending yourself is important if a credit card company has filed a lawsuit against you. But if your debt is confirmed, challenging the lawsuit as a defendant might not yield the desired results. You need a solution that addresses your financial problems from the root cause and can help you avoid an adverse outcome in the credit card debt lawsuit.
Bankruptcy might be that solution. This formidable legal mechanism can help you eliminate or restructure your debts, depending on the circumstances, and can stop any debt collection lawsuits against you, allowing you to resolve your overall financial situation.
Whether bankruptcy is right for you depends on the circumstances of your case, and it would be wise for you to determine that question before you proceed to file a bankruptcy petition to resolve your credit card debts.
Our team at the Law Offices of Wenarsky and Goldstein LLC can help you understand your options so you can make informed decisions and assist you throughout the bankruptcy filing process. Please read on for a fuller discussion of how bankruptcy can affect your credit card debt lawsuit.
How Does Bankruptcy Affect Credit Card Debt Lawsuits?
As stated earlier, bankruptcy is a legal process that allows individuals or businesses that can’t afford to pay their debts to eliminate most of their debts or create a plan to repay them over time. Its primary purpose is to provide relief to those in financial trouble while ensuring fair treatment for creditors. It also affords debtors a second chance to honor their financial obligations in a structured court-supervised setting.
There are several types of bankruptcy, each named after its corresponding chapter in the Bankruptcy Code. However, as an individual dealing with credit card debt, Chapter 7 and Chapter 13 bankruptcy are your most appropriate options.
- Chapter 7 Bankruptcy: This type of bankruptcy involves liquidating the debtor’s assets, with the proceeds used to pay off the debts. At the end of the bankruptcy, the bankruptcy judge will discharge any unsecured debts so that the debtor no longer has to pay them.
Unsecured debt is one that is not backed by collateral, and credit card debt fits this bill. Chapter 7 bankruptcy, therefore, has the potential to help you wipe off your credit card debt if you do not have the resources to repay it. - Chapter 13 Bankruptcy: Chapter 13 bankruptcy allows you to reorganize your debts and pay them off slowly, following the terms of the court-approved repayment plan.
Any unsecured debts left at the end of the Chapter 13 bankruptcy, which usually lasts between 3 and 5 years, can be discharged as long as you comply with the repayment plan. Chapter 13 bankruptcy, therefore, can help you manage your credit card debt and catch up with past-due payments, giving you an opportunity to repay your debts comfortably.
How Filing Bankruptcy Can Stop Your Credit Card Debt Lawsuit
We’ve explained how bankruptcy can help you address your indebtedness. But what happens if a lawsuit for recovering the credit card debt has already been filed against you?
Filing the bankruptcy petition activates an automatic stay, which immediately stops all debt recovery actions or activities initiated by creditors, including lawsuits.
In some cases, secured creditors who are owed debts for which collateral was provided may ask the court to lift the automatic stay. Fortunately, credit card debts qualify as unsecured debts, which means you get to enjoy the automatic stay until the bankruptcy ends, during which time the bankruptcy process should have helped to take care of the debts, leaving you debt-free.
What Should You Do If a Creditor Violates the Automatic Stay During Your Bankruptcy Case in NJ?
If a creditor violates the automatic stay during your bankruptcy case in NJ, you must take immediate action. The automatic stay is a powerful tool that halts all collection actions, including civil lawsuits, wage garnishment, and attempts to collect credit card debt or other debts. When a creditor ignores this and continues to pursue a lawsuit judgment or money judgment, they are breaking the bankruptcy law.
Your first step should be to notify your bankruptcy attorney. An experienced bankruptcy attorney can file a motion with the bankruptcy court to enforce the automatic stay. The bankruptcy judge can impose punitive damages against the creditor for violating the stay. In most cases, the bankruptcy court will stop the illegal actions and protect your assets, such as your bank account or home, from being seized.
If the violation continues, your bankruptcy lawyer may advise you to file a lawsuit against the creditor for damages. This includes money judgments for any harm caused by the creditor’s actions. Ensuring the automatic stay is respected is crucial for achieving a successful bankruptcy discharge and securing the debt relief you deserve.
Considerations Before Filing for Bankruptcy to Eliminate Credit Card Debt
While it’s true that bankruptcy can halt a credit card debt lawsuit through the automatic stay, it’s not a decision to make lightly.
Bankruptcy carries long-term implications and can significantly impact your credit score. If you’re filing Chapter 7 bankruptcy to eliminate your debts, you could also lose your assets since they can be sold off to facilitate payment to your creditors.
Furthermore, bankruptcy addresses all debts. You cannot pick and choose which debts to resolve with bankruptcy. If your sole reason for bankruptcy is to take care of your credit card debt, you’ll need to carefully weigh your options to ensure bankruptcy is right for you.
Bankruptcy should not be a spur-of-the-moment decision but rather a calculated step following a thorough analysis and consultation with an experienced bankruptcy attorney who can help
- Explain the nuances of the Bankruptcy Code as it relates to your specific situation
- Evaluate your financial situation in detail
- Explain all possible debt relief options.
How the Law Offices of Wenarsky and Goldstein, LLC Can Help
At the Law Offices of Wenarsky and Goldstein, LLC, we understand the pressure that comes with overwhelming debt, particularly when a debt recovery lawsuit has been initiated against you.
As an experienced bankruptcy law firm, we can help facilitate the process of stopping your credit card lawsuit and guide you through the complexities of the bankruptcy process and toward the maximum bankruptcy discharge possible.
With our knowledge and skills, you can rely on us for quality legal counsel to help you make informed choices and obtain protection from your creditors.
We know that every bankruptcy case is different, and we are committed to helping each client we work with find a legal solution for their indebtedness that is tailored to their unique circumstances to help them achieve positive results.
Contact Us Today
Filing bankruptcy can stop a credit card debt lawsuit in its tracks. However, the decision to file bankruptcy should not be taken lightly.
It is important to seek legal guidance before taking any action so you can be sure that bankruptcy is right for you. But you need to act fast before your lawsuit ends and judgment is delivered.
Our dedicated team at the Law Offices of Wenarsky and Goldstein LLC can help you assess your options and guide you through the bankruptcy court proceedings so you can resolve your financial difficulties.
Contact us today to discuss your personal and business bankruptcy concerns, and let us take the next steps toward a debt-free future together.
Call the Law Office of Wenarsky & Goldstein
At the Law Offices of Wenarsky & Goldstein, LLC, our New York and New Jersey attorneys are experienced and knowledgeable in bankruptcy, estate planning and probate, guardianship, special needs planning, and real estate law. To learn more about how we can assist you with your legal needs, call us today at 973-453-2838.
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