Should I File for Bankruptcy if a Creditor Has Threatened to Sue Me?

Anyone who is struggling with debt can experience significant stress and anxiety upon receiving a phone call or written notice from a creditor or debt collector that threatens to sue if the debt is not paid. For many consumers in the Oak Park area, the possibility of facing a lawsuit over debt can be scary, and it is difficult to know what steps you should take. You might be wondering: should I file for bankruptcy if a creditor has threatened to sue me? In answering that question, it will be essential to consider the specific facts of your case and whether bankruptcy is the right option for you. In many cases, bankruptcy can be beneficial if you are facing a lawsuit from a creditor. Our Oak Park bankruptcy lawyers can explain in more detail, and we can also speak with you about your circumstances to help you determine the best path forward.

Creditors Cannot Make Threats When Trying to Collect Debts

While the threat of legal action can be unnerving, it is important to know that there are many types of threats a debtor cannot make under the Fair Debt Collection Practices Act (FDCPA). Although a debtor can threaten to take legal action against you if you owe the debt, the statute of limitations has not run out, and you have not filed for bankruptcy, a debtor cannot threaten to harm your reputation or to have criminal action taken against you. Protections against harassment and other threatening behaviors under the FDCPA apply to debtors regardless of whether they have plans to file for bankruptcy.

You should also know that, even if you are sued, a creditor cannot take criminal action against you. In other words, you will not be arrested for a criminal offense because a creditor has filed a lawsuit against you. These are civil lawsuits and are not connected to the criminal law system.

You Cannot be Sued if the Statute of Limitations Has Run Out

Has the statute of limitations run out on the debt that the creditor is trying to collect? If a creditor files a civil lawsuit against you after the statute of limitations has run out on the debt, the creditor will not be able to recover anything from you through the claim. If you are unsure about the statute of limitations on the specific debt, you should seek advice from a lawyer who can help.

It would not make sense, in most cases, for you to file for bankruptcy if the statute of limitations has run out on the debt you owe.

Bankruptcy Can Stop a Creditor From Taking Legal Action Against You

Filing for bankruptcy will stop a creditor from taking any legal action against you because of the automatic stay. As soon as you file for bankruptcy, this injunction applies to your case. Then, depending upon the type of bankruptcy, your debt may be discharged soon after in a Chapter 7 bankruptcy case, or you can reorganize debts and catch up on payments in a Chapter 13 bankruptcy case.

Contact an Oak Park Bankruptcy Lawyer

If you have questions about your rights when a creditor is threatening a lawsuit, or if you want to learn more about whether bankruptcy is the best option for you, you should seek advice from an Oak Park bankruptcy attorney who can help. Contact the Emerson Law Firm today to learn more.


See Related Blog Posts:

Should Retirees File for Bankruptcy?

Five Things to Know About Your Rights Under the FDCPA

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