When you are in the middle of an ongoing lawsuit and you’ve decided to initiate a bankruptcy filing, you may wonder what will happen to the lawsuit. Generally, the answer will depend on the kind of lawsuit you are involved in at the time you decide to file. It’s important to understand whether or not bankruptcy will impact your ongoing case and why working with a Memphis, TN consumer bankruptcy attorney is in your best interest when you decide this process is right for you. Keep reading to learn more about these important matters.
Does Filing Bankruptcy Impact an Ongoing Lawsuit?
In general, if you are in the middle of a lawsuit from a creditor regarding a debt you owe and you file for bankruptcy, you’ll find that filing can pause the case. This is because filing for bankruptcy grants you an automatic stay, meaning creditors must cease all collection efforts against you, including lawsuits. If they wish to continue with the case, they must petition the court to lift the stay so they may proceed with the suit. As such, you are eligible to stop most civil lawsuits against you, as the bankruptcy court is in charge of your debts, meaning they ultimately have jurisdiction over these cases.
However, it’s critical to understand that filing bankruptcy does not mean any lawsuit you are involved in will stop. Typically, if you are involved in a criminal case or child custody dispute, for example, these matters will continue regardless of the automatic stay.
When Should I Contact an Attorney During This Process?
If you have decided that bankruptcy is right for you or you are considering the process, it’s imperative to understand the importance of connecting with an experienced attorney. Many underestimate how complicated, tedious, and confusing bankruptcy can be, and unfortunately, making an error during this process can invalidate your case. As such, working with an experienced attorney from the start is critical.
Most people consider bankruptcy as soon as they receive notice that a lawsuit has been filed against them because of the automatic stay. It’s important to understand that generally, you’ll want to file for bankruptcy before your case has been settled. This is beneficial as it will help prevent the creditor from placing a lien on your home or vehicle or obtaining a fraud judgment against you. If a fraud judgment occurs, any debt you’ve accrued that is determined to be the result of fraud will be ineligible for discharge. As such, you will be responsible for paying this debt even after bankruptcy.
As you can see, connecting with an experienced bankruptcy attorney as soon as possible is critical if you have an ongoing civil lawsuit against you in relation to a debt you owe. When you need help navigating this complicated process, it’s in your best interest to connect with an experienced attorney from the Arnold Law Firm as soon as possible to assist you through this process. We understand how difficult these times can be, which is why we will do everything possible to assist you.
