Lawsuit During My Debt Relief Program – What to do now?

Lawsuits during a Debt Relief Program can be particularly stressful. You’re already struggling to manage your finances and repay debts, and then you get hit with a lawsuit. It feels like you’ve been kicked while you’re down, but it’s essential to remain calm and remember it’s not the end of the world. In such a situation, many options, such as chapter 13 bankruptcy, can offer relief and provide you with the mechanism to regain control of your finances.

Debt relief programs are the first line of defense for many people facing overwhelming debt. Such programs typically involve negotiating with creditors to reduce your total debt, lower interest rates, and potentially avoid lawsuits. The primary problem is that these programs can’t guarantee these outcomes. Depending on the debt relief agency’s skill and your creditors’ willingness to negotiate, you may still face the risk of being sued for the unpaid debts.

This is where the Chapter 13 bankruptcy can provide a lifeline. Often referred to as a wage earner’s plan, Chapter 13 bankruptcy allows individuals with regular income to develop a plan to repay all or part of their debts over three to five years. You can use Chapter 13 to halt the foreclosure on a home, catch up on missed mortgage or car payments, pay back taxes, stop interest from accruing on your credit card debt, and more.

So, how does Chapter 13 outperform debt relief programs?

The primary advantage of Chapter 13 is the ‘automatic stay.’ Once a Chapter 13 bankruptcy is filed, an automatic stay goes into effect immediately. This stay prevents creditors from collecting debts, stops wage garnishment, and freezes any debt-related lawsuits. In contrast, debt relief programs do not offer such protection.

Chapter 13 bankruptcy also offers a structured, court-blessed repayment plan. This differs significantly from debt relief programs, which involve a less formal, often unsecured repayment agreement that relies on creditors’ good faith.

One key aspect of a Chapter 13 bankruptcy plan is that it can help you repay ‘priority debts’ like unpaid child support, spousal support, or tax debt. A debt relief program could leave you exposed to these debts, but Chapter 13 bankruptcy ensures they are dealt with.

Moreover, a completed Chapter 13 bankruptcy can lead to a discharge of certain debts that are generally non-dischargeable in a debt relief program. In the end, Chapter 13 helps you regain control of your financial situation and puts a light at the end of a seemingly long, dark tunnel.

Seeking Professional Help

Navigating through financial difficulties and making decisions about things like debt relief programs and bankruptcy can be a daunting task. It’s one thing to read about these on the internet; it’s another thing entirely to apply them in real life.

Fortunately, you don’t have to do it alone. At Liviakis Law Firm, our experienced attorneys can guide you through this challenging period. We can help you understand your options, the benefits and drawbacks of each one, and assist you in making an informed decision for your specific circumstances.

Don’t let a lawsuit during your debt relief program cause panic. Reach out to us and let’s explore the possibilities together.

Remember, no matter how overwhelming your debt feels today, there is always a solution. It’s just a matter of finding it.