Can Bankruptcy Stop a Lawsuit Against Me?

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Can Bankruptcy Stop a Lawsuit Against Me?

Can Bankruptcy Stop a Lawsuit Against Me?

More than 1.5 million people file for bankruptcy each year. If you are one of those people, you may be wondering what you can do to resolve the issue. Many people have staggering debts, but some face a debt lawsuit that needs immediate action. 

Filing for bankruptcy may stop the lawsuit against you. There are specific requirements, but many lawsuits will halt with a bankruptcy case. Don’t let the lawsuit from unpaid debts scare you into not taking action! 

Keep reading to learn more about lawsuits and bankruptcy.

How Does Filing For Bankruptcy Stop a Lawsuit?

Bankruptcy is a legal process that allows people to restructure the terms of their debt and eliminate some or all of it.

Bankruptcy does not eliminate all debts, but it does make it easier for people to deal with the remaining ones. For example, if you have outstanding loans from a friend or family member, bankruptcy can help you end the loan without having to pay back any more money.

When you file for bankruptcy, the court will automatically dismiss any pending lawsuits against you. In some cases, they will even discharge your debts. However, there are certain restrictions that you should be aware of.

In the US, bankruptcy stops pending lawsuits. A person who files for bankruptcy is not necessarily discharged of their debts. But they can stop collection efforts and lawsuits from creditors.

The debtor also has the option to continue with the lawsuit after filing for bankruptcy. The court may allow them to do so if it is in the best interest of justice and fairness.

Can You File Bankruptcy After Losing a Lawsuit? 

Losing a lawsuit can be financially devastating. It is not uncommon for people to file for bankruptcy after losing a case.

Whether you can file for bankruptcy after losing a lawsuit depends on your state. Some states allow you to file for bankruptcy if your income falls below specific levels. Other states only allow it if your assets are less than exact amounts.

Types of Lawsuits That Can Be Resolved with Bankruptcy

Although bankruptcy is typically associated with credit card debt, it covers other types of debt. Debts that you can dismiss in bankruptcy include:

Mortgage Debt

When a person files for bankruptcy, their mortgage debt is often forgiven. There are two ways to deal with debt when filing for bankruptcy:

  • The debtor can repay the debt and keep it
  • The debtor can discharge the debt by proving that they cannot repay it in the foreseeable future

Most of the time, the debtor can keep their house and car. However, they might need to give up other items like jewelry or furniture.

There are two different types of bankruptcy, Chapter 7 and Chapter 13. Each has rules about how to treat assets during the bankruptcy process.

Medical Bills

Medical bills can be overwhelming and hard to pay off on your own. So if you file for bankruptcy, you can include your medical bills.

Debtors may be able to have their medical debts discharged if they cannot make payments. This could be due to insolvency, disability, or other reasons. They may also be able to negotiate a settlement with creditors and set up a payment plan to pay back the money over time.

Car Loans

The impact of bankruptcy on car loans is a complicated one. However, it is vital to understand how bankruptcy affects auto loans.

Many think their car loan would be wiped out when they file for bankruptcy. However, the truth is that most car loans are not affected by filing for bankruptcy.

The truth is that when you file for bankruptcy, they dismiss your unsecured debts before any assets or property are taken away from you. This means your car loan will still be valid, and you can continue making payments on it.

Credit Cards

If you file for bankruptcy, you can include your credit cards. However, there are some disadvantages to filing for bankruptcy. You may not be able to get a new credit card or loan in the future, and you may have trouble getting other forms of financial assistance.

Filing for bankruptcy can also be complicated and stressful. It is essential to ensure that you fully understand the consequences before deciding whether or not it’s right for you.

What Types of Lawsuits Can’t Be Resolved With Bankruptcy?

Bankruptcy is not a cure-all for debt problems. There are some lawsuits that you can’t get rid of with bankruptcy. The following lawsuits can’t be stopped by bankruptcy: 

  • Divorce proceedings
  • Criminal cases
  • Child support

Divorce Proceedings

In the United States, bankruptcy law does not include divorce actions. As a result, couples going through a divorce and wanting to file for bankruptcy have to do so separately.

However, bankruptcy law states that support payments made by spouses are not dischargeable in a bankruptcy filing. For example, if one spouse supports the other, they can’t include that as a debt in a bankruptcy filing.

Criminal Cases

Being sued for criminal charges is not a part of bankruptcy. This is because it is not a debt that the person can pay off through bankruptcy, and it’s not the same as a civil case.

Some people may think that criminal lawsuits should be included in bankruptcy. This is because they are similar to civil cases regarding debt and repayment.

However, bankruptcy law has created an exception for criminal cases. This is to prevent individuals from filing for personal gain.

Child Support

In the United States, bankruptcy laws allow people to have their debts wiped away. However, there are some cases where people cannot wipe away their debt and have to pay it off. One of these cases is child support.

Child support can be problematic because it can be hard to prove that a person cannot pay it or that they are not willfully avoiding it. This makes the process of getting child support included in bankruptcy very complicated. It is also time-consuming for both parties involved.

How Does Bankruptcy Protect You? 

When you file for bankruptcy, you can ensure you protect your assets. The bankruptcy law protects people from losing their homes, cars, and other valuable assets when they file for bankruptcy.

When filing for bankruptcy, you must understand the different types of protection you can receive. There are four types of protection:

  • Asset protection
  • Creditor protection
  • Personal liability protection
  • Debtor relief

Asset Protection

Asset protection is a legal process that allows the debtor to keep their assets after filing for bankruptcy.

Asset protection is essential because it provides the debtor with a way to keep their property and finances after they file for bankruptcy. It also prevents creditors from getting a hold of these assets and taking any money owed.

Creditor Protection

Creditor protection is one of the most critical provisions in a bankruptcy filing. It ensures that creditors get paid back while protecting the debtor’s property and income from being taken by creditors. Bankruptcy laws vary from state to state, but some general rules apply regardless of where you live.

Personal Liability Protection

This is a legal protection that protects the debtor from personal liability. It is to protect the debtor from the creditor’s claims. It also allows them to file for bankruptcy without worrying about the creditor’s claims.

Debtor Relief 

Debtor relief is a process in which the debtor is relieved of some or all of the debt owed to creditors. Debtor relief can be through discharge, suspension, or debt cancellation. To qualify for relief, the debtor must show a good reason for filing bankruptcy.

Hire a Bankruptcy Attorney Today. Call Us at 215-545-0008

This article covered how to stop a lawsuit with bankruptcy. We hope it educated you on your options when faced with legal woes due to debt. If you are ready to get started, we can help! 

Hiring an attorney shouldn’t be a complicated process. At Sadek Bankruptcy Law Offices, we have the expertise needed to be one of Philadelphia’s top-rated bankruptcy firms. We help you through the process to make it as seamless as possible. 

Are you interested in learning more? Contact a bankruptcy lawyer today to get started.

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