Being sued for repo, have to file now

[MIGirl]

I have been thinking bout filing for BK for a couple of years. I just got served for a lawsuit for a car that was reposessed about 3 years ago. I owe about $10k. What is the best way to make sure I don't get a default and then have to deal with it?

File BK before the time runs out to answer, or answer while filing for BK? I make just a bit above minimum wage so I know I quality for a chapter 7, and I quality to have the filing fee waived.

Thanks.

[LadyInTheRed]

If you are going to file BK and have no reason to delay filing, there's no point in answering the lawsuit. File the BK before the creditor gets a judgement and send a copy of the Notice of BK to the creditor and its attorney right away.

If the car debt is the only reason you are filing BK, make sure you don't have any defenses that might make it worth filing an answer. Did they file the lawsuit before the statute of limitations ran?

[MIGirl]

I do have other debts, mostly credit cards and I owe a previous landlord, but this is the largest debt. It is inside the SOL. I have been thinking about BK for a while, it wouldn't hurt my credit at all.

[LadyInTheRed]

If you need to file BK, how it affects your credit should be of little concern anyway.

[bcohen]

Actually, most people who need to file for bankruptcy protection will see their credit improve as a result of filing. The reason is because any collections accounts or charge-offs are instantly zeroed out, and any judgments will be marked as "discharged in Chapter 7 bankruptcy" with a balance of $0. This will make a person much more creditworthy than they were before filing, and will allow the person to pass a pre-employment credit check.

When I filed for Chapter 7 back in 2013, just the mere act of filing increased my credit scores by 20 to 25 points. When the discharge was granted, they shot up another 70 to 80 points. Over the past 2 years, they have crept up slowly, without me doing a thing. All of my pre-bankruptcy debts have been deleted, and all that is showing is a judgment that was discharged, and the bankruptcy itself.