Understanding the Timeline From Debt Through Bankruptcy

When you are struggling with debt, or when you first begin to take on more debt than you can manage, you might be wondering about how much time passes from the stage of debt collection to repossession, to a claim being filed against you, to the possibility of consumer bankruptcy. In other words, what is the typical timeline for consumer debt, and for substantial debt that ultimately results in personal bankruptcy? A recent article in Business.com discusses the debt timelines, and we want to provide you with some additional information about how this timeline usually works.

While the following is a general timeline for thinking about debt and bankruptcy, it is important to recognize that each consumer’s situation has its own set of facts, and nobody has the same exact timeline. However, it can be helpful to understand the steps in the process of debt collection, and specific timetables for certain actions under the law.

You are Struggling to Make Payments on Your Debt This Month
The beginning of any debt collection action is difficulty paying debt. If you are having trouble making payments on your debt and you are concerned about being late, you should consider contacting the creditor. It may be possible to get an extension on your debt to avoid late fees or penalties, and to prevent having a past due balance.

You are 30 Days Past Due
Once you miss a payment and become 30 days past due on your debt, the creditor likely will begin collection action. In most cases, this means that the creditor or lender will contact you by phone, email, or mail informing you that your payment is past due and urging you to make a payment. Once you are 30 days past due, the creditor is permitted by law to report the past due debt to credit reporting bureaus.

You are 60 Days Past Due
Your creditor or lender likely will begin more aggressive collection tactics. When you are 60 days past due, the creditor often will still be open to working with you to resolve the past due debt.

Debt is Charged Off
Once you are beyond 60 days past due, the creditor usually will turn your debt over to a collection agency and will charge off the debt. The collection agency buys debts like this for a small percentage of the total balance and attempts to collect. The collection agency then will contact the debtor and attempt to collect on the full balance. You should keep in mind that you have protections under the Fair Debt Collection Practices Act (FDCPA) and that a debt collector cannot engage in behaviors that involve harassment, threats, fraud, or other actions prohibited by federal law in an attempt to collect on the debt you owe.

Lawsuit May be Filed Against You
If you do not make payment on the debt once it has been turned over to a debt collector, the debt collector may file a claim against you in court. While not all unpaid debts result in lawsuits against the debtor, this is a step that a creditor or debt collector can take lawfully. You should speak with a consumer protection attorney about your options.

Filing for Bankruptcy
If you decide to file for bankruptcy, the automatic stay will prevent debt collectors from continuing to collect on debt, and it will stop any lawsuits against you from moving forward.

Contact an Oak Park Consumer Bankruptcy Lawyer
Dealing with debt can be extremely complicated. For many consumers, bankruptcy can offer a solution. A compassionate Oak Park bankruptcy attorney can discuss your options with you today. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

How Debtors Should Handle Debt Collectors
What is the Difference Between Federal and Illinois Exemptions in Bankruptcy?

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