What to Do if You Are Being Sued for Debts in New Jersey

Being in debt is not unusual, and many people have debt to pay off. If you have missed too many payments, the creditor might come after you with a lawsuit.

You should immediately meet with an attorney to discuss your legal options after being sued for debts. For some, there might not be an easy way out, and financial sacrifices might have to be made. For others, the lawsuit might not be valid, and you can litigate the matter in court. For many others, bankruptcy is a great option for handling overwhelming debts and avoiding lawsuits. When you file for bankruptcy, the court should issue an automatic stay on legal proceedings against you, including a lawsuit for debts. When your bankruptcy case is complete, you should have a better handle on your debts, and some might even be discharged, depending on how you file.

If you are the subject of a lawsuit for debts, call our New Jersey bankruptcy lawyers at Young, Marr, Mallis & Associates at (609) 755-3115 to schedule a free review of your legal situation.

Steps to Take After Being Sued for Debts in New Jersey

Being sued for any reason is generally an unpleasant experience. Being sued for outstanding debts is often frightening, as losing the case could mean financial ruin. The greatest asset in your case is your attorney.

File an Answer to the Lawsuit

The first thing our Mt. Laurel, NJ  bankruptcy attorneys will do for your case is review the complaint and file an answer. When a lawsuit is filed, the plaintiff – in this case, the creditor suing you for debts – must submit a complaint to the court. They must also serve the defendant (i.e., you) a notice of the lawsuit. Whatever you do, do not ignore the complaint or notice.

If you ignore the complaint and do not respond, the case does not go away, and the court will not reach out to you and give you a second chance to answer. Instead, the defendant (i.e., the creditor) will move for summary judgment against you. If summary judgment is granted, you will lose the lawsuit automatically. You must respond to the lawsuit, even if you are not hopeful about the outcome.

Speak to an Attorney

Talk to a lawyer about your legal options as soon as possible, preferably before filing an answer to the lawsuit. You usually have at least a few weeks to submit an answer, and you can use this time to evaluate your case with an experienced lawyer.

Your lawyer can assist you in reviewing multiple legal options and determining which one works best for your situation. Remember, your attorney can help you protect yourself from creditors who are only after the money they are owed. There might be a way, other than a lawsuit, to pay your debts and avoid the lawsuit.

Litigate the Case

If necessary, your lawyer can litigate the case with you. This might be a good option if your attorney believes that the case against you is invalid or overblown. For example, depending on the nature of the debts involved, creditors usually can only file a lawsuit for debts if a certain number of payments have been missed. For example, missing a single mortgage payment should not result in a lawsuit from the bank or other creditors. If the lawsuit is filed prematurely, your attorney can help you defend yourself.

Your attorney can also help you review your agreement with the creditor to determine whether their claims are enforceable in court. Not all agreements or contracts are invalid. Creditors are sometimes shady and include terms and conditions in contracts or agreements that are unfairly detrimental to the other party. These shady creditors often rely on people being unfamiliar with legal or financial matters and unrepresented by an attorney. Your attorney can protect you from shady agreements in court.

Filing for Bankruptcy After Being Sued for Debts in New Jersey

While bankruptcy is often viewed as a last resort, it could be the answer you need when facing a lawsuit for unpaid debts. At the end of a bankruptcy case, the debts at the center of the lawsuit might be discharged, and the case against you might be dismissed or dropped.

Chapter 7 Bankruptcy

One popular bankruptcy option is Chapter 7 bankruptcy. This chapter is often referred to as liquidation bankruptcy. Under Chapter 7, the person filing for bankruptcy will have their assets liquidated by a bankruptcy trustee. Assets that might be liquidated include your home, vehicle, and other properties. The proceeds from the sale of these assets will be used to pay off as much debt as possible.

In some cases, bankruptcy petitioner has enough assets to cover their debts. In others, the value of the liquidated assets might not be enough to pay for everything, and there might still be outstanding debts.

Luckily, courts might discharge some remaining debts. When the courts discharge a debt, you are no longer legally liable to pay, and creditors cannot come after you for more money or sue for the debt. If the debts involved in the lawsuit against you are discharged, the case should either be dropped or dismissed.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy often does not involve the liquidation of any assets. This might be a good option for people who want to file bankruptcy to get out from under debts but also want to hang onto things like their home and vehicle. Under this chapter, you can work with your attorney to come up with a payment schedule to help pay back debts over time.

Contrary to Chapter 7, which is often completed in a few months, Chapter 13 bankruptcy is spread over several years. Once the court and creditors approve your payment schedule, you must stay on the plan for several years before any debts are discharged. If you keep up with the plan, which might be very strict, the court might be willing to discharge any debts.

Other Bankruptcy Chapters

Other bankruptcy chapters might fit your needs better than those mentioned here. While Chapters 7 and 13 are arguably the most filed bankruptcy claims for individuals, other chapters are designed for other financial situations. For example, if your business is in the process of declaring bankruptcy, other chapters might be better suited to your needs. Talk to a lawyer to better understand how to file for bankruptcy and avoid a lawsuit for debts.

Speak to Our New Jersey Bankruptcy Attorneys About Your Lawsuit

Call Young, Marr, Mallis & Associates at (609) 755-3115 to arrange an evaluation of your case for no charge with our Cherry Hill, NJ bankruptcy attorneys.