Can I File for Bankruptcy to Avoid a Debt Collection Lawsuit?
Being contacted with frequency by creditors or debt collectors can be frustrating, and it can be extremely stressful to learn that a creditor or debt collector is threatening to sue you to recover the money you owe if you do not make payments. If you have been contacted by a creditor or debt collector recently and have been threatened with a lawsuit, you might be considering bankruptcy as an option. Indeed, you might be wondering: can I file for bankruptcy to avoid a collection lawsuit?
In general, filing for bankruptcy does stop any new collection-related lawsuits from being filed or from moving forward, which our West Palm Beach bankruptcy lawyers can explain to you in more detail. At the same time, it is important to understand your rights when it comes to collection efforts by creditors and debt collectors. Our firm can tell you more.
Automatic Stay in Bankruptcy Will Stop Collection Actions
First, if you are wondering whether you can prevent a collection lawsuit by filing for bankruptcy, the answer is usually yes due to the automatic stay. The automatic stay is an injunction that stops any new legal actions from being taken against you and stops any existing actions. Accordingly, you can stop an impending debt collection lawsuit by filing for bankruptcy.
Know Your Rights Under the FDCPA
While you can file for bankruptcy and go through a bankruptcy case to avoid a collection lawsuit from a creditor or a debt collector, it is also essential to know your rights as a debtor when it comes to actions taken by debt collectors. Under the Fair Debt Collection Practices Act (FDCPA), debt collectors cannot make criminal threats against you or threats against your reputation. You also have protections against harassment and abuse from debt collectors. Debt collectors are also prohibited from lying to you in order to convince you to pay debts you owe.
Understand the Statute of Limitations on Your Debt
Many people considering bankruptcy to avoid a collection lawsuit are dealing with a substantial amount of debt and seeking additional bankruptcy protections, as well. Yet it is nonetheless important to be sure that your debts are still debts that can be collected under the law — make certain that your debts have not been time-barred. If the statute of limitations on your debt has run out (you should check with a lawyer about the specific statute of limitations on particular debts), a collector cannot receive damages from you in a civil lawsuit and cannot take legal actions against you to collect the debt.
Contact Our West Palm Beach Bankruptcy Attorneys Today
Whether you have questions about the automatic stay and how it stops lawsuits and garnishments, or you want to learn more about filing for bankruptcy in South Florida, an experienced West Palm Beach bankruptcy attorney at Kelley Kaplan & Eller, PLLC can help. Contact us today to ask any questions you have about personal bankruptcy and to find out more about filing for bankruptcy and the protections that come with a bankruptcy case.
Sources:
law.cornell.edu/uscode/text/11
ftc.gov/legal-library/browse/rules/fair-debt-collection-practices-act-text#806
