If I am being sued by a creditor, is it too late to file bankruptcy?

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If I am being sued by a creditor, is it too late to file bankruptcy?

I was just served papers saying I have 20 days to respond. I am unable to come up with the settlement amount. I need to know how to save my house.

Asked on November 9, 2010 under Bankruptcy Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You can file at any time--even after being sued, and even potentially while in court (e.g. once the matter reaches trial). Note that bankruptcy may not help you that much, however: while it imposes a temporary "stay" or delay on collections actions (including via lawsuits), at the end of the day, if you have secured debt, like a mortgage, if you can't pay your obligations, the creditor can take the property securing the debt--i.e. they can foreclose on your house, whether or not you've filed. (They would not be able to subsequently sue you for a deficiency judgment, or other amounts owed, if you filed bankruptcy.) The bankrutpcy filing will therefore give you some time and breathing room, and it  *may* give you some leverage to get the creditor to agree to lower payments, etc., but it's not a silver bullet--fundamentally, you'll still have to pay.


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