- Review all your options for resolving debt, before you file for bankruptcy.
- Speak with an experienced bankruptcy attorney, to see if you qualify for bankruptcy.
- Make sure to understand if your bankruptcy discharges your debt obligations or if you must repay them.
I was served a civil summons recently for non payment of a credit card, if I file for bankruptcy, will it be revoked?
I was served a Civil Summons from the District court for a credit card that we quit paying on due to our finances. This is not the only credit card we had to quit paying on. My husband was laid off and I just had a baby. By the time we got on our feet our minimum payments were ridiculous. My question is If we filed bankruptcy, would the summons be revoked?
If you file for bankruptcy, then all ongoing cases against you will be put on hold. It does not mean that the summons will be revoked; rather it will be put on hold till the bankruptcy court determines if you qualify for chapter 7 or chapter 13. If you qualify for chapter 7, then in all likelihood, this debt will be dismissed along with the other qualifying debts. If you qualify for a chapter 13, even then, the court will decide on the payment terms for that debt. I will discuss more regarding bankruptcy in just a moment.
Bills.com offers advice on how to file for bankruptcy if you chose to take that route.
Quick tip
Concerned about what is appearing on your credit report now? Check your credit report today and get a free score instantly.
Before you decide to file for bankruptcy, I encourage to speak to one of Bills.com's approved debt help providers, to see what your available options are.
Types of Bankruptcy
There are two basic types of consumer bankruptcy: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, also called a liquidation bankruptcy, a bankruptcy trustee will examine your assets, and if you have any assets which are not exempt, sell those non-exempt assets to repay your creditors. Once your non-exempt assets have been sold to pay your creditors, all remaining unsecured debts will be discharged by the bankruptcy court.
Many people who file for Chapter 7 protection are able to keep all of their property because they have no non-exempt property. Each state has its own schedule of exempt assets, so you should consult with a qualified bankruptcy attorney in your state to find out if Chapter 7 is a workable solution for your situation. An attorney will also be able to tell you if you qualify to file Chapter 7 under the new guidelines enacted by Congress in 2005.
You mention in your question that you may lose your home in bankruptcy, so it sounds like Chapter 7 was the bankruptcy chapter you discussed with your attorney. There is an alternative, though, in Chapter 13 bankruptcy.
A Chapter 13 bankruptcy, also called a "wage-earner’s bankruptcy", allows you to propose a plan to repay creditors over time, usually five years. Your monthly payment amount will be based on your monthly disposable income as defined by the bankruptcy code.
After you have made payments to your creditors for five years, any remaining unsecured debts will be discharged. Chapter 13 is commonly used by debtors whose assets exceed the exemptions offered by state law. It is also used by many consumer debtors who do not qualify for Chapter 7 relief under the means test, which went into effect in 2005 with the Bankruptcy Reform Act.
Consult with an attorney to find out if bankruptcy will benefit your financial situation. Read more about bankruptcy at the Bills.com Bankruptcy Information page.
I hope you will be able to resolve your financial problems without the need to file bankruptcy.
I hope this information helps you Find. Learn & Save.
Best,
Bill
Debt statistics
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Collection and delinquency rates vary by state. For example, in Kentucky, 16% have student loan debt. Of those holding student loan debt, 10% are in default. Auto/retail loan delinquency rate is 4%.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.
So, the worst that can happen right now, based on your description of your income and assets, is that you could receive calls and letters that increasingly become more aggressive. If you feel you are being harassed, read up on your rights under the Fair Debt Collections Practices Act.
Judgments appear on a credit report for 7½ years from the date the judgment was entered, or the length of the judgment, whichever is longer.
The fact a judgment ages-off a credit report has no relevance to whether it may be used to start a wage garnishment, account levy, or lien.
The statute of limitations question is a non-issue. Why? A statute of limitations for debt is an affirmative defense used in court. A statute of limitations is not a bar to private collections activities. By private collections activities, I mean calling the debtor on the telephone, sending the debtor letters, and so on. If a creditor filed an action against a debtor, and the state statute of limitations had passed, the debtor/defendant could raise the statute of limitations as a defense. He or she would say something like, "All of what the plaintiff says may be true, but because the plaintiff filed its action after the statute of limitations for this type of contract expired, I ask the court to dismiss this case." The court will look at the dates, and if the defendant/debtor is accurate, the court will dismiss the case.
In some states, such as Wisconsin and Mississippi, the state statute of limitations also prevents an original creditor or collection agent from collecting the debt when the statute of limitations expires. You mentioned Oklahoma, which does not have the expanded rules for its statute of limitations. Therefore, unless the collection agent(s) file a lawsuit against you in Oklahoma, discussing the expired statute of limitations with the collection agents is not helpful.