Can I File Bankruptcy If I’m Being Sued?
If you are being sued in a civil matter where the result may be a monetary judgment, bankruptcy may be the solution you need to stop the lawsuit and discharge the debt. When you are being sued, you have three options when you are served with the complaint. You can file an answer to the complaint alleging your defenses to the allegations contained in the complaint, you can try to settle the matter prior to the deadline for filing the answer or you can ignore the matter and not file an answer or response.
If you decide to ignore the lawsuit, you are giving up the opportunity to dispute the allegations as well as risking a default judgment. While some people believe they cannot file bankruptcy if they are being sued, being sued is actually one of the top reasons that many people file bankruptcy.
How Can Filing Bankruptcy Help if I am Being Sued?
When you file bankruptcy, if you are being sued the automatic stay imposed under the Bankruptcy Code immediately stays the lawsuit. In very limited situations, the automatic stay may not applysuch as in family law cases concerning custody or support; however, in most cases, filing bankruptcy stops a lawsuit from proceeding. The automatic stay remains in effect until your bankruptcy case is closed or the court lifts the stay.
The automatic stay provides the debtor relief from being sued and the ability to reorganize the debtor’s debts (i.e. Chapter 13 case) or obtain a discharge of the debts (i.e. Chapter 7 case). The final resolution of the lawsuit will depend on the type of lawsuit and the facts of the case; however, the automatic stay provides time for the person to deal with being sued in a way that is more beneficial to the person’s financial well-being and long-term financial goals.
Can a Lawsuit Continue After a Bankruptcy Case?
Yes, some lawsuits can continue after the bankruptcy case is closed or if the creditor successfully petitions the court to lift the automatic stay. If you are being sued for a debt that is non-dischargeable through bankruptcy, the automatic stay only provides a temporary reprieve from being sued. Examples include but are not limited to:
- Lawsuits to collect a student loan.
- Family court lawsuits by a former spouse to enforce a Family Court Order.
- Lawsuits to collect child support or alimony.
- Debts owed for money that was obtained by fraud or under false pretenses.
- Some debts that were incurred within a specific period of time prior to the bankruptcy filing.
- Lawsuits for damages in a personal injury case or wrongful death case that involves operation of a vehicle, boat or aircraft while under the influence of drugs or alcohol.
- Penalties or fines owed to a governmental entity.
In order to know if filing bankruptcy will help you if you are being sued, you should contact our office as soon as possible for a free bankruptcy consultation. While filing bankruptcy may stop a lawsuit from proceeding, it is best if you can take actions to prevent being sued at all such as filing a bankrjtpcy case prior to the creditor filing a lawsuit.
Contact an Experienced Louisville Bankruptcy Attorney
We’ve Helped Thousands of KY Families, we can help you!
The bankruptcy attorneys of Musselwhite Meinhart & Staples, PSC have over 50 years of combined legal experience. If you are facing a lawsuit, we can help you. We represent clients throughout Hardin County, Jefferson County and central Kentucky.
Contact us at our Radcliff and Elizabethtown Office in Hardin County at (270) 351-6032 or toll free at 1-800-754-HELP to schedule a free consultation with one of our attorneys. You may also contact our office through our convenient online contact form.
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I am being sued for an accident that my daughter was in, in my car. The plaintiff was not injured at the time and months later we get a summons in the mail. 25,000 in medical expenses I’m being sewed for. We responded with an answer to the courts. I want to know if filing bankruptcy would help us