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[Video] Can I File for Bankruptcy If I’m Involved in a Lawsuit?

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[Video] Can I File for Bankruptcy If I’m Involved in a Lawsuit?


Has a creditor filed lawsuit against you? It’s a common misconception that a lawsuits or judgments are not discharged in bankruptcy. This isn’t the case. In fact, bankruptcy can be an effective way to deal with debt even when a judgment or pending action is looming against you. Look at filing for bankruptcy when you’re in this situation.

How Does a Pending Lawsuit Affect a Bankruptcy Filing?

If someone believes you owe them money, they may file a lawsuit against you. Unfortunately, you can’t control the timing of a lawsuit. You might have already been considering filing for bankruptcy when you are served with legal papers. Here’s the good news – a pending lawsuit shouldn’t deter you from filing for bankruptcy. You can still file. As a result, filing will almost always halt the lawsuit and prevent further action against you.

Can a New Judgment Against Me Stop the Filing?

If a creditor already has a judgement against you, that’s not a reason to delay filing for bankruptcy. Actually, you’ll want to file as quickly as possible in order to stop the judgement creditor from garnishing wages or taking your property. Share the details of the judgment with your bankruptcy attorney and discuss what it means going forward. In some cases, the judgment can be discharged. In other cases, it will be wrapped into your bankruptcy plan for repayment. It depends on your financial situation and whether you opt for Chapter 7 or Chapter 13 bankruptcy.

How Does Filing for Bankruptcy Stop Lawsuits and Judgments?

When you file for bankruptcy, an automatic stay is put in place. An automatic stay is like a big stop sign that temporarily stops creditors from contacting you. It forces creditors and other parties to wait during your bankruptcy period and see how things are resolved. It allows time for you, your bankruptcy attorney and the court to work together to create a new financial plan. Whether a lawsuit is pending or a judgment is already in place, you can still move forward with filing for bankruptcy and take advantage of the automatic stay.

Does Filing for Bankruptcy Make a Lawsuit Go Away Forever?

In most cases, a bankruptcy will discharge a lawsuit or judgment because the financial matter is included in your bankruptcy. However, some legal actions will continue regardless of whether you file for bankruptcy. This includes criminal cases, divorces, child custody cases, and child support orders. But you may be able to cope with the costs of these circumstances more easily when you have a manageable bankruptcy plan in place. Contact a bankruptcy attorney to make the right choice for your financial future.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

Video Transcript

One of the common misconceptions that people have when they come into my office is that if there has been a lawsuit filed, or a judgement entered against them, that we cannot use bankruptcy to deal with that debt. The plain answer is that we certainly can deal with that debt. Filing a bankruptcy, either a Chapter 7 or a Chapter 13, stops all collection efforts against you, including lawsuits or the collection of judgments. Please call us for a free consultation. We would be happy to talk to you about how we can use bankruptcy to help you.

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