Tag Archives: credit card debts

Cross-Collateralization and bankruptcy

Recently on our legal forum a user asked, “I filed for Chapter 7 bankruptcy last year and had $10,000 worth of unsecured credit card debts discharged. Unfortunately, one of those credit cards was with a credit union. I also had a car financed through the same credit union. I paid off the car loan, but the credit union is refusing to send me the car title. When I talked to them they said something about cross-collateralization. Can you tell me more about what this means?”

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Credit Card Giant Drops Thousands of Lawsuits

According to the Wall Street Journal, J.P. Morgan Chase has started dropping thousands of its credit card collection lawsuits in five states. The bank is the nation’s second largest bank by assets, having more than a $100 billion in credit card accounts. Debtors in the states of California, Illinois, New Jersey, New York, and Florida owe J.P. Morgan Chase approximately $45.9 billion in outstanding credit card debt.

J.P. Morgan Chase has refused to comment on why they withdrew so many lawsuits, but there is speculation the banking giant is caught up in a robo-signing scandal. A whistle blower, who formerly worked for the banking conglomerate, settled a claim against them claiming J.P. Morgan Chase was improperly signing-off on debts without the supporting paperwork.

What does this mean for the average debtor? Debtors should always ask a credit card company to verify its debt if there are any questions about the validity of the claim. Validating a claim also applies when your credit card company has sold the debt to another collection firm. The new owner of the debt must be able to validate your original debt to legally collect.

Defaulting on credit card debt, and then having a lawsuit filed against you for the collection of the debt, is one of the leading causes of bankruptcy. A legal judgment from a lawsuit is one of the most powerful tools bill collectors have for collecting debts. With a judgment won, collectors can attach liens to your assets, freeze bank accounts, garnish wages in states (in certain states), and perform a variety of other collection actions.

If a judgment has been rendered against you, filing for bankruptcy may offer protection. Filing bankruptcy initiates an automatic stay which stops certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment. Creditors may not have contact with the debtor and will have to go through a U.S. Bankruptcy Court trustee for debt repayment.

Chapter 7 and Chapter 13 Bankruptcy are the most common types of bankruptcies. Chapter 7 Bankruptcy, commonly called liquidation of your assets, is the simplest and quickest form of bankruptcy. It is available to individuals, married couples, corporations, and partnerships.

Chapter 13 Bankruptcy is the second bankruptcy available to individuals and is called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts.

Have you had to use your credit card to make ends meet? Are you paying the minimum payments? If you are facing a financial crisis, bankruptcy may be one solution. Bankruptcy laws can be complicated. Do not file for bankruptcy without seeking help from a bankruptcy lawyer.

If you need relief from the stress of debt and you live in or around the metropolitan area of Dallas, Texas, contact us at www.BankruptcyHome.com. We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.