Facing a lawsuit filed against you as you contemplate seeking bankruptcy protection can leave you confused. You need to understand how a bankruptcy impacts a pending lawsuit as well as what impact that litigation has on a bankruptcy case.
Time Frame
Although you don't have to rush to the bankruptcy court if someone files a lawsuit against you, do not unduly delay seeking bankruptcy protection either. Certainly file bankruptcy, if that is your intent, before the lawsuit is scheduled for trial.
Function
The bankruptcy court issues what is known as an automatic stay order when you file your case. The order brings the lawsuit to a halt pending a specific order of the bankruptcy court.
Benefits
The benefit of filing bankruptcy after a lawsuit is filed against you is that any claim being made by the plaintiff in that case becomes a part of your bankruptcy case.
Types
You have two primary bankruptcy options: Chapter 7 bankruptcy liquidates your debts, while Chapter 13 bankruptcy allows you the chance to pay off your debts through a payment plan overseen by the court.
Expert Insight
Fully protect your interests in defending the lawsuit and pursuing a bankruptcy with the aid of legal counsel. An experienced bankruptcy attorney is in the best position to protect your rights.
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