Creditors are allowed to file a lawsuit to collect a debt, but they may not use the threat of a lawsuit or intimidation to collect money owed.
In other words, a creditor is not allowed to make idle threats. Under the Fair Debt Collection Practices Act, a creditor may only tell you it intends to file a lawsuit if it means to actually do so.
If a creditor is moving forward with a lawsuit, it's in your best interest to consult an attorney to determine whether bankruptcy is a viable option. Bankruptcy immediately stops lawsuits and other debt collection efforts through something called an automatic stay.
The automatic stay is designed under the U.S. Bankruptcy Code to stop any lawsuit filed against you. It also puts an end to almost any other action against you, your property, and your paycheck.
That's why our office sees so many people rightly choosing bankruptcy when a creditor threatens to sue. Bankruptcy laws are very powerful and can help protect you while you try to get a fresh start.
(Remember: Any creditor who tries to illegally collect on a debt can be fined by the court and forced to give back any property or money taken. Should a creditor threaten you physically or personally, or otherwise use harassment or intimidation in an attempt to collect a debt, you may file a complaint with the Federal Trade Commission as well as the Consumer Financial Protection Bureau. In some cases you may even be able to sue the creditor for damages.)
Call us today at 816-842-6200, or email us to schedule your free consultation.