If you are seriously behind on paying off the debts owed to your creditors, they may start conducting drastic collection activities. Namely, they may go as far as pursuing legal actions against you. If you feel desperate with nowhere else to turn, you may consider seeking refuge from such collection activities by submitting yourself to Chapter 7 or Chapter 13 bankruptcy proceedings. Continue reading to learn whether you can still file for bankruptcy even if there is a pending lawsuit against you and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you be strategic with your next move.
Can I file for bankruptcy if there is a pending lawsuit against me?
Simply put, yes, you may file for bankruptcy if there is a pending lawsuit against you. Firstly, your pending lawsuit may remain unaffected by your bankruptcy filing and proceed as normal if it is a criminal case, family law case, or fraud-related case.
Secondly, your bankruptcy filing may work to your benefit if your pending lawsuit involves a money collection action. Specifically, it may stop the lawsuit altogether. This is, in large part, thanks to the automatic stay that is imposed at the start of your bankruptcy proceedings.
Lastly, but still importantly, if you are the plaintiff of a pending lawsuit, you may have to account for the money you could recover in the final judgment as an asset in your bankruptcy filing. In other words, you may end up losing this money during the course of your bankruptcy proceedings.
Can I file for bankruptcy after losing a lawsuit?
Say, for instance, that you recently received an unfavorable final judgment as a plaintiff or defendant of a lawsuit. In turn, the court may have ordered you to pay the other party a certain amount in damages. This may pile onto all the other debts that are burdening you. Well, you may rest easier knowing that you are allowed to file for bankruptcy almost immediately after losing a lawsuit. Ultimately, this may temporarily prohibit collection activities for what you owe in damages.
However, it is almost recommended to declare bankruptcy before the court issues its final judgment for your ongoing lawsuit. For one, this is because the outcome is too unpredictable. Secondly, this may curb the possibility of your creditors using this money judgment to put a lien on your property, which your bankruptcy filing will be unable to remove. Or, it may prevent your bankruptcy judge from potentially asserting the money judgment non-dischargeable based on findings of fraud.
In conclusion, you must not enter your bankruptcy proceedings without first retaining the strong legal representation of a skilled Rockland County bankruptcy attorney. So please contact our firm, The Law Offices of Allen A. Kolber, Esq. today.
