Q: I have an unsecured loan I defaulted on. No judgement yet, but letters from attorney. Can I bankrupt out of this?
I have an unsecured line of credit I defaulted on. They have not taken me to court to receive a judgement yet. I have only received letters from a lawyer stating they are going to proceed. Can I bankrupt out of this debt or do I have to wait until a court grants them a judgement?
A: You do not have to wait until they obtain a judgment. Contact a local bankruptcy attorney and schedule a consultation. You need to know your options before you can make a decision on how to deal with the debt. Some individuals would file bankruptcy to discharge a $1,500 cable bill while others will not file despite owing $40,000. It is a personal decision only you can make. You can search for an attorney using the Justia "Find a Lawyer" link at the top of this page.
A: Unsecured lines of credit may be included in Chapter 7 bankruptcy. All collection practices against you are required to stop once you file for bankruptcy. You have an obligation to meet certain income standards to be granted bankruptcy protection. Under the terms of Chapter 7 bankruptcy, you may be required to liquidate some of your assets to pay some of your debts before being granted a clean financial slate.
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