Guiding You Through Your Important Legal Needs

Dealing with a lawsuit over an outstanding debt

On Behalf of | Dec 2, 2016 | Personal Bankruptcy

Falling into debt can be a scary and overwhelming experience. Many Pennsylvanians who carry debt understand the worry and frustration that come with not being able to achieve financial freedom on their own. In some cases, when debtors are unable to make their loan payments, they may even face lawsuits initiated by their creditors for the recovery of the owed sums.

A lawsuit is a legal method of seeking resolution to a legal problem. Many debt-based lawsuits develop from contracts; whether a person has an agreement with his credit card company, a bank, or another lending institution, that agreement likely outlines the expectations and responsibilities of the parties under the contract. There are provisions that explain details about the agreement, as well as provisions that stipulate what the parties may do when the other breaches the agreement.

The failure of a debtor to make payments on his loan is often sufficient to constitute a breach of the operating loan agreement. In such cases opposing parties may have different remedies, such as the reclamation of collateral, garnishment, and the use of liens to secure their money. As every lending agreement is different, readers of this post are asked to review their own contracts carefully and to consult with bankruptcy attorneys if they have questions about their own debt needs.

Litigation can be a lengthy process that can force a person to expend time and money that he may not have in order to get out from under an outstanding debt. In some cases it can be more effective for a debtor to proactively negotiate with a creditor to avoid a debt-based lawsuit. For others, personal bankruptcy may provide a useful service to allow them to manage all of their debts at once and to avoid the challenges of coping with loan and debt litigation.