Some people with extreme financial problems find themselves fending off multiple credit card lawsuits from different card companies. There simply are no provisions for combining the accounts or preventing several companies from filing separate lawsuits. Each lawsuit is potentially devastating, as each could lead to a court judgment and bank garnishment. A person facing multiple credit card lawsuits should immediately seek help from a bankruptcy attorney.
Considerations
Illinois Legal Aid reports that people facing credit card lawsuits have no chance to win in court if the attorney for each credit card company proves that the debt is valid and payment was not made. Some people fail to even show up for their court date. That leads to an automatic victory for the card company, with bank garnishment possibly next.
Frozen Accounts
Bank garnishment orders are signed by a judge and allow the debt collector to withdraw money electronically. The money is used to satisfy a money judgment requiring debtors to pay the full amount owed for the credit card debt. The garnishment order freezes checking accounts while the debt collector takes money in a lump sum or in installments. Meanwhile, debtors are not allowed to access the accounts except to make deposits. Checks written will bounce, and attempts to use debit cards will be declined.
Bankruptcy
Multiple credit card lawsuits, money judgments and bank garnishment often lead to bankruptcy. Bankruptcy features a powerful provision called "the automatic stay." The stay is a legal injunction signed by a judge. It stops bank garnishment immediately, forcing frozen accounts open while preventing debt collectors from withdrawing more money. The automatic stay is so effective that it is a primary reason some people file for bankruptcy.
Advice
Bankruptcy attorneys usually offer free consultations, and someone with multiple lawsuits should consult with several attorneys to get a wide range of views on the situation. The Federal Trade Commission recommends avoiding bankruptcy if possible, but sometimes there isn't a better option when multiple lawsuits are underway.
Types of Bankruptcy
Chapter 7 bankruptcy is the simplest form of personal bankruptcy and eliminates credit card and other unsecured debt in a few months. Chapter 7 is usually available only to people with low incomes. Others qualify for Chapter 13, which reorganizes debts through a payment plan lasting three to five years. Both forms of bankruptcy feature the automatic stay.
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