Can I File For Bankruptcy If I Have a Pending Lawsuit?

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If you have decided to file for bankruptcy, you probably want to make sure that no obstacles can mess up your plans for a fresh financial start. One thing that you might have to worry about is a pending lawsuit. Fortunately, the bankruptcy process does offer you a few protections. A Bergen County bankruptcy lawyer may be able to help you move forward with your plans despite pending litigation.

Can a Pending Lawsuit Stop My Bankruptcy Filing?

For the most part, a pending lawsuit will not stop you from filing for bankruptcy. This is usually the case whether someone is suing you for money or you have a criminal or family law case filed against you. If you are the one who has filed a lawsuit, it may have to be considered in a bankruptcy case if you have the possibility of collecting money from someone else.

In some cases, a pending lawsuit can be stopped in its tracks due to a bankruptcy filing. This is because of the “automatic stay” that gets issued once you have filed.

What Kind of Pending Lawsuit Can Be Affected By an Automatic Stay?

An automatic stay puts a stop to debt collection actions against you. If a mortgage lender or credit card company keeps bugging you about payments, they have to stop doing that. This means that a pending lawsuit against you that is meant to collect money would be stopped by the automatic stay, at least for a short period of time.

Your creditor may appeal to the court and ask to let the case continue. This is not always a possibility, but the judge is especially likely to grant the request if the plaintiff can argue that their case is related to your bankruptcy case. Let’s say that you are being sued by a bank that alleges that you took out a line of credit with no intention of paying off your purchases. This could certainly be relevant to your bankruptcy case and the potential discharge of your debt.

What Kinds of Lawsuits Can’t Be Stopped By Filing For Bankruptcy?

There are many types of cases that don’t get affected by an automatic stay. If you file for bankruptcy, some pending lawsuits can continue against you. Good examples of unaffected lawsuits include:

  • Criminal cases
  • Divorce suits
  • Child custody or child support actions
  • Evictions

So do not just assume that filing for bankruptcy will stop all legal proceedings against you.

Meet With Our Legal Team

If you are ready to file for bankruptcy, contact the Law Office of Boyd & Squitieri. We can schedule a consultation and tell you more about how this all works. Whether you have all of the necessary paperwork ready to go or you’re still trying to decide if this process is the right one for you, we’re ready to help.