Should I file for bankruptcy before my small claims case is heard regarding debt thatI owe?

I have debt that is about $14,000 in total. Filing for bankruptcy makes sense to me. I would rather spend the $634 to the lawyer to file for bankruptcy then to the debt collector since I am going to file for bankruptcy. But when do I need to start the process of bankruptcy and do I need to file or have it completed before I go to small claims court?

Asked on September 1, 2011 under Bankruptcy Law, Massachusetts

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It would be advisable to wait until there is a judgment against you in the Small Claims Court case before filing bankruptcy, so that you would know the amount of the judgment to include in your bankruptcy. 

If there are other creditors hounding you and if any of them have a wage garnishment against you, then it would be advisable to file the bankruptcy now to stop the wage garnishment.  You could then file an amendment to the bankruptcy when you know the amount of the Small Claims court judgment and include it in your bankruptcy.

You don't need to file or have the bankruptcy completed before you appear in Small Claims Court.

Your income and other factors will determine whether you are eligible to file Chapter 7 bankruptcy or Chapter 13.  Chapter 7 is straight liquidation which eliminates your debts.  If you are not eligible for Chapter 7, then you will need to file Chapter 13.  Chapter 13 requires a plan (budget) for repayment of creditors.

It would be advisable to speak with a bankruptcy attorney to determine whether you are eligible for Chapter 7 or will have to file Chapter 13.


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