When you’re in debt and have a pending lawsuit, it can be incredibly overwhelming. However, many assume they cannot file for bankruptcy to ease the financial burden they face if there is a pending lawsuit against them. If this reflects your circumstances, it’s imperative to understand your rights during these times. Keep reading to learn more about this process and how a Memphis, TN consumer bankruptcy lawyer can help you through these matters.
Does a Pending Lawsuit Impact Bankruptcy?
When you are a part of a pending lawsuit as the plaintiff or defendant, understanding whether or not you can file for bankruptcy during this time is critical to planning for the future. Generally, being a part of a lawsuit will not prevent you from filing for bankruptcy. However, there are things you should understand about these matters.
Depending on the circumstances of your case, filing may halt or suspend your trial, if it revolves around money or debt. This is because filing could eliminate your obligations, meaning you no longer have to pay the money you were being sued for.
However, if your case is handled by a criminal or family court, filing for bankruptcy likely will not impact these matters.
Is There Anything Else I Should Consider?
If you are the party filing the lawsuit but want to file for bankruptcy, it’s important to understand that the outcome of your lawsuit could be taken by your bankruptcy trustee and used to pay off your debts. This is because you may be unable to protect these winnings using an exemption.
Additionally, when you file for bankruptcy, you are granted an automatic stay. Essentially, this means all collection efforts against you must stop. These efforts include lawsuits. However, the courts ultimately have jurisdiction over whether or not to continue the injunction orders. Depending on the type of lawsuit you’re filing, the courts may allow collection efforts to continue. For example, the courts will likely allow lawsuits regarding elections, child support, criminal cases, and code enforcement to proceed regardless of the automatic stay. If you are the plaintiff, filing will not halt your case, however.
As you can see, there are many considerations you must make when there is pending litigation but you wish to file bankruptcy. Unfortunately, this process can be incredibly overwhelming without considering any pending lawsuits, so it’s in your best interest to connect with an experienced attorney to help you through this process.
At the Arnold Law Firm, we understand how frustrating it can be to find yourself in debt. However, when there is pending litigation against you, it can be even more confusing. As such, it’s in your best interest to connect with a member of our legal team who can assist you through these challenging times. We will do everything possible to help you navigate these times to achieve the best possible outcome for your circumstances. Connect with us today to learn more.
