Lawsuits And Bankruptcy
Bankruptcy and Family Law Attorney in Coeur d’Alene
Serving Coeur d’Alene & Kootenai County Areas, including Coeur d’Alene · Hayden
You might be considering bankruptcy if you’ve recently been threatened with a lawsuit or if a lawsuit has already been filed against you. When people are getting sued, most have many questions regarding lawsuits in general, and some specific questions regarding whether it is time to file for bankruptcy. Whether to answer the complaint, what happens if the complainant gets a judgment against you, if bankruptcy can stop a garnishment for the judgment, and what might happen if you ignore the situation are common questions, and we’ll address some of those issues briefly here.
There is a presumption that, if you do not answer the complaint, you agree with it. If you have a defense or need to buy some time, you should probably answer the complaint. If you do nothing, it is very likely that the court will award the plaintiff what he or she has asked for in the suit, or, in cases where the plaintiff hasn’t stated an amount, the plaintiff will be required to prove an amount of damages. If you did not answer the complaint, you probably won’t be able to take part in this hearing. A plaintiff who has received a judgment against you can get a lien on your assets to recover the amount of damages, and can go to the sheriff to garnish your wages or take money from your bank accounts. You can always negotiate with the creditor for judgment payments. Sometimes, creditors who have filed a lawsuit against you will save money by negotiating a discount of the judgment amount with you rather than pursuing legal avenues to collect. If all your assets are exempt, you might be able to simply ignore the lawsuit and the consequences thereof.
It can be several weeks or even months between the time you are served with the notification of a lawsuit against you and the time that the creditor receives a judgment it can enforce on you. The need to file for bankruptcy shouldn’t be driven by the timeline of the creditor’s lawsuit against you, as the debt will likely be dischargeable either way. However, it is worth noting that, if a judgment lien has been attached to your assets, you can only avoid it if it impairs a bankruptcy exemption. If, for some reason, the debt is not dischargeable in bankruptcy (the creditor claimed you defrauded it, for example), you may not be able to contest those charges after a judgment has been entered. Additionally, if there is not a set amount for the debt (an unliquidated debt), a judgment against you will liquidate that debt. This means that the total amount of your debt may increase and exceed limits for filing Chapter 13.
If you’ve had a judgment entered against you, and the creditor is garnishing your wages, filing for bankruptcy will stop the garnishments on any wages you earn after the filing date via the automatic stay. The only exception is in support cases.
Want to learn more? Contact us and speak with our bankruptcy or family law attorney to discuss whether bankruptcy is the right option for you.