Bankruptcy Lawsuits Attorney in Waco, TX
Bankruptcy and Lawsuits
Many good folks have relied on credit cards to get them through tough financial times and now find themselves unable to repay all of their credit card debt. They stop paying their creditors, try to ignore this problem and then one day they are served with a lawsuit. Seeing your name listed as the “DEFENDANT” in court papers is a very intimidating thing, but there are protections available to you.
The filing of a bankruptcy case will stop a lawsuit and can discharge the debt that was the subject of the lawsuit. The moment a bankruptcy case is filed, an “automatic stay” is immediately is imposed and creditors are prohibited from filing a lawsuit or continuing to pursue a lawsuit. The automatic stay is so powerful that it even stops the IRS from its collection actions! When we file a bankruptcy case, we file a notice in all pending lawsuits that the automatic stay is in effect which notifies that court that the lawsuit must stop. When our clients receive the Bankruptcy Court order that discharges their debt, we file motions to dismiss any lawsuits that were pending when the bankruptcy case was filed.
Many people believe that a bankruptcy cannot discharge a judgment. That is simply not true. We can discharge debts before a lawsuit is filed, while a lawsuit is pending or after a judgment has been obtained.
Attorneys, who have obtained a judgment against someone, frequently file a judgment lien in the county deed records. In Texas, this is called an “Abstract of Judgment” which creates a judgment lien on all real estate owned by the debtor in that county in which the Abstract of Judgment is filed. When we file a bankruptcy case for a client that has been sued by a creditor, we check the deed records to see if an Abstract of Judgment has been filed, then file a motion to avoid that lien with the bankruptcy court. That ensures that the judgment lien is released by the bankruptcy court, freeing you to sell or refinance your home in the future without any difficulty.
Are You the Plaintiff in a Lawsuit?
Some of our clients are involved in a lawsuits in which they are suing someone, not lawsuits in which they are being sued. Being the plaintiff in such a lawsuit can affect your bankruptcy case. These lawsuits are actually assets which must be disclosed so that they can be protected in the bankruptcy case. Even if the lawsuit has not been filed before the bankruptcy case is filed, it is important that pending or potential lawsuits be disclosed in your bankruptcy schedules. Failure to disclose them will result in your bankruptcy paperwork, which is signed under the penalty of perjury, to be filed with false representations. It will also result in the loss of the ability to pursue that lawsuit.
It is very important that you tell your bankruptcy lawsuits attorney about all lawsuits, or potential lawsuits, that you may have so that they can be properly handled in your bankruptcy case. There are exemption laws that may allow you to protect these assets, but failure to disclose them will most certainly result in the loss of these assets. Call our bankruptcy lawsuits attorney from Erin B. Shank, P.C., to receive help.