More often than not, the majority of the clients that come see me have just been served/sued by a creditor, most likely a credit card lawsuit or a mortgage deficiency lawsuit. The first question the debtor asks me is how can bankruptcy assist me regarding this lawsuit.
The Automatic Stay:
The filing of a bankruptcy stops the pending lawsuit instantly. The bankruptcy court will notify the creditors that you have filed for bankruptcy within a day or two of filing. Once the automatic stay is in effect the creditor will cease to continue to move forward on the lawsuit and will most likely dismiss the action (upon the successful completion of a bankruptcy).
Preventing a Judgment:
The majority of my clients that come see me have been served with a lawsuit and their time frame to respond has elapsed. If you don’t respond to the lawsuit within the allocated time frame then the creditor will obtain a judgment against you. The filing of the bankruptcy will stop the creditor from obtaining a judgment against you. Stopping a judgment by filing for bankruptcy is very important. If the creditor is able to obtain a judgment against the debtor then the creditor will now have a way to try to collect money from the debtor (via wage garnishment, freezing bank accounts, seizing assets).
If you have been served with a lawsuit it is important contact your bankruptcy attorney immediately. Shmucher Law, PL assists debtors in filing for Chapter 7 and Chapter 13 bankruptcy in Broward, Miami-Dade, and Palm Beach Counties. If you would like to schedule a free consultation then please give our office a call to discuss your individual case.