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What could happen when a creditor takes you to civil court?

On Behalf of | Jul 18, 2022 | Bankruptcy

Many people don’t realize what kind of aggressive collection efforts are legal until they fall far behind on one of their financial accounts. If all you have had experience with so far has been vaguely threatening letters and repeated phone calls to your house and place of employment, you may not realize that your creditors will eventually grow tired of pursuing you and will take you to civil court.

Those facing a creditor lawsuit for the first time may not realize the consequences of such court proceedings and will therefore fail to adequately protect themselves. What happens after a creditor serves you with lawsuit paperwork?

You must defend yourself or risk major losses

When a creditor takes you to court because you have fallen behind on payments, you do have the right to defend yourself. Generally, you will need to present evidence of payments that the lender has not credited to your account or to show some kind of issue with the loan paperwork or collection process.

Otherwise, the main concerns of the courts in such cases will be the validity of the debt and the accuracy of the claims by the creditor. Your ability or alleged inability to make payments on time will not influence how a judge rules when a creditor takes you to court.

If the judge rules against you, the consequences could include the garnishment of your wages or a lien placed against your property, such as your primary residence. To avoid these drastic attempts to collect on a debt, you may need to file for bankruptcy.

Bankruptcy proceedings before a lawsuit can help

It can be difficult to challenge the lien on your property or the garnishment of your wages after of creditor successfully take you to court. You will have a much easier time protecting yourself and your financial solvency if you avoid a judgment against you.

When you file for bankruptcy initially, the automatic say that the courts grant will usually result in a temporary cessation in collection activity. The courts will dismiss the lawsuit against you, and then you may be able to discharge the debt before the lender can take you back to court again.

Learning more about how filing for personal bankruptcy breaks the cycle of collection activity and increasing debt levels can help those trying to regain control over their personal financial circumstances.