I had a client come into my office this week and asked me if she could still file for bankruptcy because one of her creditors (a credit card company) just sued her for nonpayment. The answer to that question is YES, you can absolutely file for bankruptcy even after a creditor has sued you. The majority of the clients that come to my office are getting a free consultation because they were just served with a lawsuit and now feel it is time to act.
Once your bankruptcy case is filed the automatic stay shield comes into play and all lawsuits are temporarily halted and most likely will completely end.
Chapter 7 Bankruptcy and Lawsuits
The majority of debts are dischargeable in a Chapter 7 filing so the lawsuit will end completely and prevent the creditor from obtaining a judgment or attempt to garnish the wages against the debtor. There are some debts that are non-dischargeable but in order to determine the dischargeability of a debt you need to speak with an experienced bankruptcy attorney.
Chapter 13 Bankruptcy and Lawsuits
In a Chapter 13 bankruptcy a debtor is in a repayment plan for a period of either three or five years. Upon the filing of the bankruptcy any lawsuits will be frozen. As long as the debtor completes the three or five year repayment plan the debts will likely be dischargeable, however if the debtor fails to complete the repayment plan and the bankruptcy is dismissed then the lawsuits and all the debtors debts will be actionable.
The filing of a bankruptcy is a complicated process and you should seek the advice of an experienced attorney. If you would like to schedule a free consultation at Shmucher Law, PL then please contact our office at 305.741.5553 or 954.309.5559.