Does Bankruptcy Protect You From Lawsuit Judgments?
The financial hardships that lead people to file for bankruptcy protection are many. Some people file for bankruptcy because of a job loss or because the medical bills from a serious injury or illness ruined their finances, even if they were able to return to the workforce after they recovered from the health crisis. In some cases, divorce impoverished them, since the divorce court awarded most of the marital debts to the bankruptcy applicant, while awarding most of the marital property to the applicant’s ex-spouse. Letters from creditors, threatening to sue over unpaid debts, are often a precipitating event that leads people to file for bankruptcy protection, but legal troubles can themselves be a source of financial hardship that sends people to bankruptcy court. You might have exhausted your savings paying legal fees, or if the court ruled against you, it might have ordered you to pay a judgment amount that you cannot afford. If you are facing a lawsuit and you are in dire financial circumstances, regardless of which of these problems caused the other, contact a Plantation chapter 7 bankruptcy lawyer.
What Happens If You File for Bankruptcy While a Case Against You Is Pending?
Chapter 7 bankruptcy protection means that, if the bankruptcy court accepts your filing, it quickly discharges your eligible debts, but it can liquidate your non-exempt assets to settle your debts as part of the process. Many chapter 7 bankruptcy applicants do not own any non-exempt assets, so they can get through the chapter 7 case without the bankruptcy court liquidating any of your property.
If you file for bankruptcy while a civil lawsuit against you is pending, the bankruptcy filing automatically places a stay on your pre-existing lawsuit. This does not mean that the court automatically dismisses the pre-existing lawsuit; it also does not mean that the civil court pauses the lawsuit until after your bankruptcy case is finished. Rather, the civil case and the bankruptcy case can proceed at the same time. If the civil court rules against you and orders you to pay a judgment to the plaintiff, the stay means that the civil court cannot collect the judgment if you cannot pay it. For example, it cannot garnish your wages to collect the money. Sometimes this results in the civil court discharging the judgment amount it originally ordered you to pay, since there is no way to collect payment.
A Bankruptcy Filing Can Help You Pick Up the Pieces After a Legal Debacle
Maybe the lawsuit against you is in the recent past, and you paid the judgment that the court ordered you to pay, but now you have no money left to pay your bills. Situations like these are a common reason that people file for bankruptcy. A bankruptcy filing can discharge your credit card debt and medical bills that piled up during your legal problems.
Work With a Debt Lawyer About Bouncing Back After Bankruptcy
A South Florida debt lawyer can help you file for chapter 7 bankruptcy protection if you are facing a civil lawsuit. Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.
Source:
moneywise.com/managing-money/debt/personal-bankruptcy-filings-are-soaring-this-year
