Bankruptcy and credit card debt judgments

While the economy continues its slow recovery from recession, many people have fallen behind in paying their bills. They also may have had to rely more heavily on credit cards than they would like, adding to the debt they already owe. Debt collectors have become more aggressive in their pursuit of payment for credit card debts, and more consumers are finding themselves facing lawsuits that creditors have filed as a means of collecting money owed. In many cases, people do not know how to respond to these suits so they end up with judgments against them. People may think that there is no help for them after a court issues a judgment for credit card debt, but bankruptcy is an option for dealing with those debts.

What is a judgment?

A judgment is an order from the court stating that the court found that the consumer owes the creditor a certain sum of money. The judgment allows a creditor to use more collection methods than the creditor could without the judgment, such as garnishing a person's wages, attaching a bank account or putting a lien on a person's property.

When a person misses payments on credit card debt, the lender may choose to file a lawsuit with the court. The lender must give the consumer notice of the suit, and the consumer has a limited amount of time to respond to the suit. If the consumer does not respond to the suit, which happens in many cases because people are intimidated by the thought of going to court or do not know where to turn for help, the court issues a default judgment. If a consumer does respond to the suit, the creditor will take the matter to a hearing and try to obtain a judgment.

Bankruptcy and unsecured debt

A judgment for credit card debt is an unsecured debt, which means that there is no property tied to the debt as collateral, unless the creditor took steps to use the judgment to file a lien on some piece of property. Bankruptcy can discharge most unsecured debts, including credit card judgments, and can often remove judgment liens on property. When a person files a bankruptcy petition, the court issues an automatic stay on collection actions, as well, which means that creditors may not continue to garnish wages, attach bank accounts or try to file liens - despite the fact they have judgments.

Consult a lawyer

The best time to deal with a credit card debt lawsuit is before it becomes a judgment. When a person receives notice of a creditor's lawsuit, he or she should talk to an experienced debt relief attorney who can discuss the best strategy for handling the lawsuit and reorganizing finances overall. It is not too late to deal with the situation once a credit card company has obtained a judgment, however. If you are facing a credit card judgment, seek the assistance of a skilled bankruptcy lawyer who can help you resolve your financial problems.