Texas Credit Card Laws & Bankruptcy

TX Credit Card Lawsuits and Bankruptcy

texas credit card lawsuitsCredit Card companies and or assignees of Credit Card Companies file lawsuits to collect past due Credit Card accounts almost every day in Texas. But you can stop such a lawsuit by filing for bankruptcy because Credit Card debt is considered unsecured debt. You will need to consult a resourceful lawyer to determine whether filing for bankruptcy is the best option for you in your situation.

Automatic Stay

You can file for a Chapter 7 or a Chapter 13 bankruptcy both of which can stop the lawsuit filed against you by Credit Card companies.  Automatic stay is a feature of bankruptcy that acts as an injunction. It not only stops credit card lawsuits it also stops foreclosures, credit card collectors, wage garnishments, repossessions and more.

However, automatic stay may not have any effect in situations where criminal proceedings are involved. It does not apply in situations such as in child support collections and in situations where someone has recently or previously filed a bankruptcy or bankruptcies. It is simply meant to give you some breathing room to get things together to reorganize or liquidate.

Credit card debt is unsecured debt, which simply means there is no property securing the debt. If you are eligible to file bankruptcy, you can totally eliminate your credit card debt by filing a Chapter 7 bankruptcy.  Under a Chapter 13 bankruptcy, credit card companies have to accept whatever you can afford to pay them even if its pennies to a dollar.

There are instances where credit card lawsuits allege that credit cards are secured. Some credit card agreements outline terms that allow them to reclaim specific items you buy if you do not repay them. If you sign those agreements, you may have to part with items that you bought with the credit card when you are in debt.

For instance appliance store credit cards, furniture and department store cards may claim that they have a security interest in the property you bought with their credit card.  Your lawyer can look at both the credit card lawsuit and credit card agreement and advise you accordingly.


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Why You Should Fight Lawsuits by Credit Card Companies

There are a number of people that don’t bother fighting credit card lawsuits. Some choose not to because they fear the legal system and lawsuits or think that the suit may be too expensive. Credit Card companies will file a lawsuit, and if you don’t respond, they will get a judgment and wait to attack when you least expect it.

They may hold onto the judgment until you have a means to pay and then attach it to your home, bank account or other non-exempt property. Remember they still have the right to collect interest on the original amount.  When you fight back, it usually catches them by surprise and they often soften to accept much less than they filed suit for.

They settle because they know if they waste time fighting you in court for years, you may just file for bankruptcy and all their efforts would have been wasted. But filing bankruptcy is not the best option for some people.