Will filing bankruptcy get me out of paying damages regarding a lawsuit that I lost?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Will filing bankruptcy get me out of paying damages regarding a lawsuit that I lost?
I’ve been working to pay off 50K of credit card loans slowly over the past 5 years since my career change. I’m down to about 25K but have very little disposable income or assests (make about 25K a year after taxes). I worked as an independent insurance representation for a while, and after I left to start a more profitable job, a client sued me for an Errors and Ommissions issue. The state board said I was clear of wrongdoing but the lawyer still thinks I’ve only got a 11 in 4 shot of winning the case. They offered to settle out of court for 60K and state that damages, plus my legal fees will be in the mid-six figures. If I lose at court. If I win, I still have 40K in legal fees. Will bankruptcy cover either?
Asked on January 31, 2013 under Bankruptcy Law, Texas
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
Filing for bankruptcy regarding a potential lawsuit can prevent the plaintiff (the person who is suing you) from collecting a judgment or placing a lien on your home. You can file even after you have been sued but if you wait until after the lawsuit is over and the court rules against you, any damages levied against you will become a secured debt; you may not be able to discharge it through bankruptcy at that point.
However, you will need to decide which chapter of bankruptcy to file under. If you file a Chapter 7 bankruptcy, all of your property that is not legally exempt can be sold off to meet your debts; once the property is gone so too are your debts (all of them, not just the amount oed for the lawsuit). If you file a Chapter 13, you can keep your assets but you must enter into a repayment plan (3-5 years) under which your all of creditors are paid a discounted amount of what is owed them.
This is just a basic explanation. At this point, you should consult directly with a bankruptcy attorney in your area. They can best advize as to your spedific situation.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.