At what point do most consumers file bankruptcy? Nobody can predict the future and nobody is going to volunteer themselves for as severe a step as bankruptcy without any action or threat of action from their creditors. That is why in most cases, bankruptcy is only filed after a creditor files or threatens a lawsuit against the debtor. Your creditor will likely threaten to file suit against you assuming that you will do everything in your power to settle without having to file bankruptcy. As a result you may be able to use the threat of bankruptcy to your advantage in negotiations. No creditor wants to go through a bankruptcy because it is such a time consuming process and because they may not see a 100 percent return on their loan.
How to React to a Lawsuit
The one thing you do not want to do is ignore the lawsuit and just file bankruptcy. A collectable judgment without a bankruptcy is one thing and a bankruptcy without a collectable judgment is passable as well but to have both on your record would be devastating for your credit in the long term. If you’re lucky enough to have simply received a final warning from your creditor threatening a lawsuit then you should act immediately so you can either A.) Pay off the debt via debt consolidation or negotiation so you don’t have to resort to bankruptcy or B.) Contact a licensed bankruptcy attorney and notify the creditor that you have begun bankruptcy proceedings. You will want to keep an open line of communication between your party and your creditor because if they do not know you plan on filing bankruptcy then they will file the lawsuit and that will damage your credit as well.
Learn More About Bankruptcy and Judgments
There is plenty more to be learned regarding bankruptcy, judgments, and lawsuits between creditors and debtors. If you wish to learn more before you find yourself in the throes of a heated confrontation between yourself and the big bad nasty creditors then take action today. Take a licensed bankruptcy attorney up on a free consultation and get your most pertinent bankruptcy questions answered. That way you can be sure that your credit will not be damaged any more than it already needs to be with lawsuits on top of your inevitable bankruptcy.
