Bankruptcy and Pending Lawsuits
In many cases, bankruptcy can affect lawsuits pending against you depending on the chapter filed. Chapter 7 bankruptcy discharges debt while Chapter 13 restructures debt. It’s common for consumers to seek bankruptcy protection if being sued but depending on the debt in question, bankruptcy may or may not impact the lawsuit.
A lawsuit that results in wage garnishment may be disrupted by a bankruptcy filing. If wage garnishment is in effect against your wages or you have received a notice from your employer regarding the pending action, discuss options with a legal representative or bankruptcy attorney.
If you are being sued for back child support or alimony, bankruptcy may not provide protection against what is owed. The situation may allow for revisions made on the original agreement regarding support payments but missed or behind payments are unlikely to be included in bankruptcy.
Unsecured debt such as credit card accounts or medical bills may qualify for discharge under Chapter 7 bankruptcy. Even tax-related debt could be discharged if certain qualifications are met. Bankruptcy filing has what is called an automatic stay that prevents collection action from creditors from continuing against you and debt collectors are prohibited from contacting you.
If you are considering bankruptcy, there are qualifications that need to be met in order for the filing process to begin. But even consumers who have filed bankruptcy in the past may qualify to file again.