Bankruptcy > Bankruptcy FAQs

Bankruptcy FAQs

Q: I received a summons and a complaint from a creditor. What does that mean?

A: If you were served with a summons and a complaint from one of your creditors, that means, that a lawsuit has been filed against you for the collection of a debt. The lawsuit is a state court proceeding. You have the option of fighting it by filing an answer with the court. The court will ultimately set a trial date, and you will have the opportunity of to prove why you don't owe the debt in a court of law. (Note, it is very unlikely for you to win this proceeding since, usually, the debt is owed).

If you do not file an answer, then the creditor will most likely get a default judgment against you. There are certain requirements/procedures that the creditor must follow, but ultimately, it is their goal to obtain the legal right to begin collecting from you. They may do this by garnishing wages, filing a lien on your property, etc.

Q: How did my creditor file a lawsuit against me when I am in the middle of debt settlement?

A: There is no law that forces a creditor to settle with you through a debt settlement or consolidation company. Unfortunately, this means that even though you are making monthly payments to a company, creditors are free to file a lawsuit against you.

Q: If I file for bankruptcy, what will happen to the lawsuit that has been filed against me by my credit card company?

A: You should consult with an attorney regarding any particular lawsuit, but in many cases where the lawsuit involves collection of a debt by an unsecured creditor (subject to certain requirements) the lawsuit is stopped from proceeding when you file for bankruptcy. The reason is, when you file for bankruptcy for the first time, the automatic stay takes effect. The automatic stay puts a stop to all other collection efforts by a creditor. Instead, your debts are dealt with through the bankruptcy.

Q: My car was repossessed and now my car lender is coming after me for more money. Can they do that?

A: Often times, if you are unable to make payments on your car loan, the car lender will come and repossess the car. When that happens, the creditor sometimes re-sells the car. If the amount that the car was re-sold for does not cover the total amount that you owe the creditor, then the car lender will usually come after you for the difference. That difference is considered an unsecured debt which could possibly be discharged with your bankruptcy. You should consult with an attorney to find out more about your options.

Q: What is the difference between a secured debt and an unsecured debt?

A: A secured debt is a debt that is secured by some type of collateral. For instance, if you stop making your auto installment payments, the car lender is secured by your vehicle- which means your car lender can take your car back to help recover the money that you borrowed from the car lender. Another example of a secured creditor is your house mortgage. If you stop making your payments back to the lender who lent you money to buy the house, the lender can take your house back (through foreclosure) to help recover their loss.

An unsecured creditor is a creditor who lends you money without any security. Most credit card lenders are unsecured. That means, if you stop making your credit card payments, there is nothing for the creditor to take from you to help recover what you owe them. (Unless you have a secured credit card) In order to begin to garnish your wages or put a lien on your property, an unsecured creditor generally needs to first win a lawsuit against you.

For any other questions regarding bankruptcy, please contact the Stone Haven Law Group at (877) 301-7005 today.