Will Bankruptcy Stop a Credit Card Lawsuit?

Bankruptcy Attorney St. Petersburg Florida

These days, it is crucial to possess at least one credit card. Try renting a car without one. If used properly, credit cards can be a very valuable tool. Some credit cards carry “rewards programs” that bring with them some pretty useful benefits. For example, if you use your credit card for everyday living expenses, and then pay it off in full each month (so as to not incur any interest charges), you can earn enough “points” to go on a vacation every year. There are many advantages to properly using a credit card. In a perfect world, we would use our credit cards wisely, reap tremendous benefits, and nothing bad would ever happen to us. Doesn’t that sound nice?

As you are no doubt aware, we do not live in a perfect world. “Life” gets in the way of even our best plans. Be it injury or illness, marital problems, job loss, or poor financial planning, there are all kinds of reasons that could lead someone to seek legal advice from someone like myself. Let’s look at an example of where someone started out with good intentions, but unforeseen circumstances led them to a credit card nightmare:

“Mr. G” had very good credit. So good, in fact, that a major credit card company (we’ll call them “Bank of USA”) offered Mr. G a pretty good deal. If Mr. G put at least $5,000.00 on his new Bank of USA credit card in the first 90 days after activating the card, Bank of USA would give Mr. G 50,000 “points” that Mr. G could use for travel (airfare, hotels, car rental, etc…). They also gave him a pretty low-interest rate, so even if Mr. G didn’t pay off his balance each month, he wouldn’t have to pay very much in interest. Mr. G had a pretty well-paying job in St. Petersburg, Florida, and lived a pretty stable life. He quickly realized that the more put on his Bank of USA credit card, the more points he would receive. Mr. G was planning a fishing trip in Costa Rica at the end of the year, and his goal was to pay for the trip using only credit card points. In a matter of six months, Mr. G had incurred credit card charges of $50,000.00. Normally he liked to pay off his balance every month, but with Christmas coming, he figured he would just make a few minimum payments so he could free up some money for presents for his family. That’s when things took a turn.

Mr. G was fishing on the beach one day when he stepped on a piece of glass, slicing open his foot. It hurt a bit but didn’t seem like a big deal. In the days to come, he realized that his foot was infected. The doctor told him that he had contracted a rare blood disease. Mr. G’s health quickly deteriorated. The doctors told him that he would have to stay in the hospital for a prolonged period of time. After using up all of his allotted “sick time” at work, his job told him they couldn’t keep him employed and had to replace him. Suddenly Mr. G found himself unemployed, hospitalized for a long period of time, and all of his money was going to co-payments, deductibles, and other unforeseen expenditures. The very last thing on Mr. G’s mind and the lowest priority for Mr. G at that moment was his sizable credit card bill with Bank of USA.

Mr. G had to skip a payment. As almost all banks will do as soon as a payment is missed, Bank of USA raised Mr. G’s interest rate on the card from the low percentage rate to more than 20 percent. The minimum payments skyrocketed and now it was impossible for Mr. G to catch up, especially with no income. After a few more missed payments, Bank of USA turned the account over to a third party debt collector, who called Mr. G repeatedly. Once the debt collector realized that Mr. G wasn’t going to pay them, they hired a lawyer and filed a lawsuit. It was at this point that Mr. G decided to contact a lawyer.

This example is not all that uncommon. One seemingly minor life event can lead to catastrophic consequences. So what are the options available to you if you are facing a lawsuit for missed credit card payments? Assuming there are no good legal defenses to the lawsuit (you actually do owe it), then filing for bankruptcy might be your best option.

The good news is that once you file for bankruptcy, an Automatic Stay goes into effect. Think of an Automatic Stay as a tool used to freeze any and all lawsuits pending against you. While an automatic stay is in place, the credit card company, or third party debt collector, is unable to prosecute their case against you. They are now subject to the protections afforded by the bankruptcy court. The vast majority of individuals filing for bankruptcy do so under what is known as Chapter 7 or Chapter 13. While these two different kinds of bankruptcy have differing advantages and consequences, BOTH Chapter 7 AND Chapter 13 will immediately freeze a credit card lawsuit with an Automatic Stay.

Keep in mind that consulting with a bankruptcy lawyer, paying a lawyer, giving the lawyer financial documents, or signing a bankruptcy petition, will NOT give you the protection you need. It is not until a bankruptcy petition is actually FILED with the bankruptcy court where you will receive an Automatic Stay. This distinction is very important. You will come across many bankruptcy lawyers in Saint Petersburg, and all over the state of Florida, that will offer you what seems to be very enticing “payment options.” Before agreeing to any such payment plan, be sure to find out exactly when the lawyer intends to file your bankruptcy. A credit card lawsuit will contain strict timing deadlines. If you let the case go too long, without filing the bankruptcy to stop it, you could face severe consequences, such as wage garnishment.

Don’t wait until it is too late. If you are facing a credit card lawsuit, or fear that one may be coming soon, the time to act is now. Contact the experienced lawyers at Berkowitz & Myer so you can learn how the bankruptcy laws might help you with your particular financial situation. No two clients are the same and no two situations are the same. We look at each individual client and their unique state of affairs, and we come up with a plan of attack to guide them through this difficult time. The best part is that there is no cost to you, the client, for your initial consultation. You can meet with a lawyer, find out how the laws can help you, and not pay anything. We look forward to hearing from you.—

Jesse D. Berkowitz, Esq.

Attorney at Law

Stopping Creditor Harassment

The last thing anyone in debt wants to hear is the sound of creditors calling. The phone seems to ring at all hours of the day and relief never seems to come. Victims of creditor harassment often allow the calls to continue because they are unaware of legal alternatives that would protect them from further harassment.

Because creditor calls will simply not stop on their own, victims need to realize they taking action is the only thing that will help. The following are alternatives that victims of creditor harassment can use in order to “fight back” against the seemingly never-ending calls.

Knowing Your Rights

It is not uncommon for debtors to believe that creditors have all of the leverage in matters of collection. While creditors do have leverage whenever it comes to collecting money, creditors do not have free reign when it comes to their collection efforts.

Under both Florida and Federal law, creditors must abide by specific rules. Violation of these rules provide debtors with legal rights to bring forth legal action against harassing creditors. Some restrictions creditors face under the Florida Consumer Collection Protection Act (FCCPA) include:

  • Misrepresenting themselves as police or a government agent
  • Contacting you between the hours of 9 p.m. and 8 a.m. without your permission
  • Holding themselves out as attorneys or misrepresenting to you that an attorney is involved
  • Communicating with you directly when they know you have retained legal counsel.
  • Creditors that violate any of the restrictions set forth in the FCCPA are subject to payment of damages and attorney’s fees. Victims should remember that they may also bring forth a cause of action under federal law.

Is the Debt Real?

Creditors can best take advantage of those least suspecting individuals. Sometimes, calls about debt may in fact just be phishing scams attempting to collect free money. Victims of harassment may assume that the debt is real and they do in fact owe the money sought. It is imperative that individuals verify, by requesting documentation, that they do in fact owe the debt and that the company on behalf of whom the creditor is calling does own the debt. If the creditor is unable to provide proof of the original debt, the victim should assume that this is a potential fraud issue and should request that the creditor no longer call.

Work out a deal

Many debtors receive harassing phone calls because they are incapable of paying the debt owed. Reaching a deal may be the best option for both parties. Creditors are aware they will often be unable to collect all of a debtor’s outstanding debt; in many cases, they may not collect anything at all. However, reaching a deal provides the creditor with the opportunity to collect a reasonable portion of the debt and allows the debtor to settle for a manageable amount less than what he or she owes.

Call a St. Petersburg Creditor Attorney Today for a Free Consultation

If you are in debt, you do not need to be a victim of creditor harassment. The alternatives discussed above provide debtors with opportunities to reconcile debts while avoiding harassment. The skilled and knowledgeable team at Berkowitz & Myer will help protect you against harassing creditors and help you recover damages whenever permissible under Florida and federal law. Call 727-344-0123 and schedule your consultation today.

1 https://www.ftc.gov/system/files/documents/plain-language/fair-debt-collection-practices-act.pdf
2 http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0559/Sections/0559.72.html

no-cost consultation: (727) 344-0123