Why a credit card company cannot sue you after bankruptcy

On Behalf of | Mar 15, 2024 | Blog, Credit Card Debt |

Filing for bankruptcy provides individuals with a fresh financial start, allowing them to alleviate the burden of overwhelming debt. However, many individuals wonder about the consequences regarding their creditors, particularly credit card companies.

Understanding why a credit card company cannot sue you after bankruptcy sheds light on the protections afforded to debtors under bankruptcy laws.

Bankruptcy gives legal protection

Once you file for bankruptcy, a protection called an “automatic stay” kicks in. This stops creditors, including credit card companies, from taking any legal action against you. Think of it as a timeout that gives you room to organize your finances without dealing with lawsuits.

Debts get discharged

The main aim of bankruptcy is to wipe out your debts. This includes credit card debt. When a debt is “discharged,” it means you are no longer responsible for paying it back. Credit card debt is usually the kind that gets discharged because it is not tied to anything you own, such as a house or car.

Creditors have limits

Before and after bankruptcy, there are rules creditors must follow when trying to collect debts. One of those rules is that they cannot legally sue you once your debt gets wiped away.

Bankruptcy court stops lawsuits

Bankruptcy cases go to a special court. If a credit card company tries to sue you after bankruptcy, you can inform the court about it. The court has the power to stop the lawsuit and even punish the company for breaking the rules.

Bankruptcy provides you with legal protection from credit card companies, giving you the chance to begin anew without worrying about facing court battles again.


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