Bankruptcy is often thought of as a taboo term but it can be an effective and powerful tool to eliminate debt and provide a fresh start for consumers struggling with debt. It is inevitable that there will be a significant increase in the number of bankruptcies because of the Covid-19 crisis. Unfortunately, consumer debt lawsuits have continued with creditors like American Express, Capital One and Bank of America all initiating new suits against consumer debtors. Collection law firms in New York and New Jersey like Rubin and Rothman, Forster and Garbus, and Selip and Stylianou are filing new cases with the courts and are now enforcing on existing judgments by levying bank accounts and garnishing wages. Defending one small debt lawsuit or vacating one judgment doesn’t usually require a bankruptcy as it can be resolved via settlement most times. However, what happens when a consumer has multiple lawsuits or judgments against them or just has a significant amount of debt spread over many different creditors?
Bankruptcy makes sense when a consumer has a situation where they have a significant amount of debt over many different cards or have multiple lawsuits or judgments against them. Bankruptcy eliminates any and all of these with one simple filing as otherwise the consumer must defend each lawsuit separately and vacate each judgment separately. This can make it difficult because the legal fee to work on multiple matters will be higher than filing one bankruptcy to remove all of the total debt. If a consumer qualifies for a Chapter 7 bankruptcy they will have all of their debt discharged entirely and will not have to worry about resolving each individual matter. A Chapter 7 Bankruptcy means that consumers will have to qualify under the “means test” or make under a certain amount of income annually. Additionally, any property or assets must be exempt so as not to risk losing it during the bankruptcy. A bankruptcy does not have to be the first method of solving a debt issue but it is the easiest and most cost effective way to discharge a large debt amount or many lawsuits and or judgments.