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?

Comments

Post a Comment

Popular posts from this blog

Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois , consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices . Predatory Payday Lenders and Protections for Consumers Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org . The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Mary...
Read more

Phantom Debt Collection Scams on the Rise in Illinois

Have you been contacted by a person claiming to be a debt collector who is seeking to recover a debt you allegedly owe? If so, you are not alone. According to a recent report from CBS Chicago , such parties claiming to be debt collectors are on the rise, and they are scamming Chicago-area residents. These alleged debt collectors are part of schemes known as “phantom debt collection scams,” since they involve the attempt to collect on a debt that the consumer does not actually owe. How can you avoid becoming a victim in a debt-collection scam ? What should you do if you have been targeted by a fake debt collector? How Do Phantom Debt Collection Scams Work? Now, you might be thinking to yourself: I would never agree to make payment on a debt that I did not owe. But the scam is not always that simple. Parties at the center of debt-collection scams often target consumers who do actually owe debts (to someone or to some entity), and they prey on the fact that these c...
Read more

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti...
Read more