Being sued for unpaid debts is terrifying for anyone. After hearing “you’ve been served” and being handed a stack of official court documents, you may feel overwhelmed or helpless, especially when you know you defaulted on the debt. But you are not helpless, there are legal tools to get you out of debt, and our firm wants to help you so that you know your rights so here are 5 things to know about lawsuits for unpaid debts.
5 Things to Know About Lawsuits for Unpaid Debts
There are a lot of ins and outs to lawsuits for unpaid debts. The following are just 5 things you should know about these lawsuits. If you are deep in debt beyond the lawsuit, we urge you to consult with a bankruptcy attorney as soon as possible. It is time to explore how bankruptcy can help you.
- Most creditors have little collection power without a judgment.
Prior to filing a lawsuit and obtaining a judgment, most creditors of unsecured debt can only attempt collection through collection phone calls and sending bills. While annoying, these collection tactics have little power. Once armed with a judgment, “judgment creditors” have the power to take severe collection action.
- If you ignore the lawsuit, the creditor can get a “default judgment” against you.
A default judgment gives the creditor the same powers as a judgment won after the trial. Ignoring the lawsuit is not a solution. Even if you know you owe the money, you have the right to defend yourself.
- Severe collection actions are available to judgment creditors.
Once a creditor has a judgment, there are a number of powerful collection actions they can take. The available collection actions include wage garnishment, bank account levy, or placing a lien on the property.
- Filing for bankruptcy immediately halts lawsuits.
As soon as you file for bankruptcy, pending lawsuits are automatically stayed. Generally speaking, this means the lawsuit will not move forward while your bankruptcy case is pending. Also, no further lawsuits for unpaid debts incurred prior to filing for bankruptcy can be filed against you.
The automatic stay is a provision in the U.S. Bankruptcy Code that makes it illegal for creditors to attempt to collect any debt from you after you file for bankruptcy and while your case is pending. The automatic stay stops wage garnishments and bank levies. If your case is successful, then creditors of discharged debts will never be able to attempt to collect from you on the discharged debt.
- Judgments are dischargeable (erased) in bankruptcy.
Judgments and default judgments for unpaid debts can be wiped out in bankruptcy.
Getting Out of Debt is Possible
Contact us for a free consultation. Together we’ll explore how bankruptcy can help you eliminate lawsuits and erase judgments and other debts.
We proudly serve the people of Savannah, GA and the surrounding areas, including Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Ludowici, Springfield, Pembroke, Brooklet, and Garden City.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code. Find out more about Bankruptcy in our guide: All About Bankruptcy.