Frequently Asked Questions Lawsuits and Bankruptcy
Everyday in Texas, there are many lawsuits filed. And, everyday in Texas, there are many bankruptcy cases which are filed to stop lawsuits. Some lawsuits end up going to trial, while others go all the way up to trial and the defendant files for bankruptcy. There are many more lawsuits that are dismissed or settle without the defendant ever filing for bankruptcy. If you have been sued, you might want to consider bankruptcy as an option to stop the lawsuit. Sometimes bankruptcy is the best option to address a lawsuit and prevent the “plaintiff” or suing party from ever getting a judgment. Since the “automatic stay” of bankruptcy stops most legal proceedings and collection actions, filing for bankruptcy will stop a lawsuit.
Have You Been Sued?
Contact the Texas Bankruptcy Lawyers at The Law Offices Of R.J.Atkinson if you have been sued. We can explain your options to deal with the lawsuit at a free bankruptcy evaluation. Whether it be defending the lawsuit or filing for bankruptcy, our Texas Bankruptcy Attorneys can help you to make an informed decision. If you have received service of process, or have already been served with a lawsuit and are expected to appear in court, or must provide discovery, or a deposition, that lawsuit can immediately be stopped by filing for bankruptcy.
The following are some Frequently Asked Questions about Lawsuits and Bankruptcy in Texas:
- 1. I have just been sued by one of my creditors. Can filing for bankruptcy stop a lawsuit?
- Yes. The automatic stay of Bankruptcy is a powerful law which stops all legal actions against someone who files for bankruptcy. The very act of filing for bankruptcy under any chapter of the Bankruptcy Code enacts the automatic stay. That includes lawsuits. Immediately upon filing, with only few exceptions, any lawsuit pending against you is stopped.
- 2. What are the types of lawsuits which are exceptions to the automatic stay?
- Lawsuits such as those involving child support collections and criminal proceedings are the usual exceptions. There are instances when someone has filed more that one bankruptcy case or previously filed a bankruptcy case which was recently dismissed, which doesn’t enact the stay until the Bankruptcy Court approves it. In these instances the automatic stay must be applied for or re-imposed by a special motion. Your attorney can advise you how to proceed in these kinds of situations.
- 3. I just received a Lawsuit for a credit card debt. The document says I need to file a written “answer” within 20 days. What is an answer?
- An answer to a lawsuit is exactly that, an answer. The answer is a response to the allegations contained in the lawsuit. Although the allegations are not necessarily posed in the form of a question, they require an answer. An answer to a lawsuit is usually a written response in a particular legal format. How to answer a lawsuit depends on the allegations in the lawsuit, the type of proceeding, and most importantly the facts of your particular case.
- 4. What happens if I don’t file an answer to the lawsuit within the 20 days it says to?
- If you don’t file an answer to a lawsuit, a default judgment may be entered against you. Since the law presumes that if you don't answer to a lawsuit, then you presumably agree with the allegations contained in the lawsuit. So if you don’t respond within the 20 day period, you will probably have a default judgment entered against you and everything the suing party is asking for in the lawsuit will be granted.
- 5. If I don’t respond and let them get a judgment what can happen?
- If you decide to ignore the lawsuit, then they will probably get a default judgment against you, along with any court costs, attorney fees and interest. They can then go after things like your wages, bank accounts, nonexempt personal property, and even put a lien on your home. If they can’t collect from you because you don't have the money now, they will just hold onto the judgment and renew it until you do have the means to pay. A judgment will follow you until it is taken care of. During that time the judgment creditor will have the right to collect interest on the original judgment amount.
- 6. Can I negotiate with the creditor after they get a judgment to just pay it?
- Yes. Even after a creditor obtains a judgment against you, you can always attempt to negotiate with the creditor for the payment of the judgment. Sometimes you can attempt to negotiate payment of a lesser amount. Creditors will sometimes take less than the judgment amount because the expenses incurred, in addition to the time frames of utilizing the legal system to actually enforce and collect a judgment, can outweigh accepting a lesser voluntary payment from you now.
- 7. I have been served with a credit card lawsuit from a very old credit card debt. Can they still sue me?
- That depends on what the statute of limitations for the cause(s) of action alleged in the lawsuit are. The statute of limitations sets out the time periods for bringing lawsuits in different kinds of cases. You may have a defense if the credit card company waited too long to file suit.
- 8. Can I fight the lawsuit even if I owe most of the money they claim I do?
- Probably. For many reasons, people don’t fight a lawsuit because they don’t know how, they are afraid of the legal system, or just don’t think they can win. If the creditor filed suit for the wrong amount, the service of the lawsuit was improper, the responsibility of the debt is not entirely yours, or the creditor has included things not allowed by law, you may have defenses. Every case is different, so it’s always good to consult with a lawyer to see what you can do, and what defenses you might have.
- 9. I have been sued by a credit card company. If I file for Bankruptcy to stop the lawsuit, will I have to pay any of the money back I owed for the debt prior to the lawsuit?
- That depends on what type of bankruptcy you file. If you have taken the bankruptcy means test and are eligible to file Chapter 7 Bankruptcy, you can totally eliminate your unsecured credit card debt. On the other hand, if you file a Chapter 13 Bankruptcy you can force the Credit Card Company to accept whatever your Chapter 13 plan can afford to pay them, even if its pennies on the dollar. Unless there is a judgment for fraud, child support, or an intentional injury, it’s probably dischargeable in full or in part.
- 10. I was sued last year by a credit card company and they got a default judgment because I never responded. What will happen when I file for Bankruptcy?
- In many bankruptcy cases, a judgment debt is just as dischargeable as the debt was before the judgment was entered. If the judgment is attached to your home or assets, it is avoidable to the extent of your exemptions. If the lawsuit contained allegations of fraud or another nondischargeable cause of action then you may have problems. The bottom line is that most judgments are avoidable if they impair your exemptions and the ones that are nondischargeable are likely to follow you until satisfied. The only way to find out is to obtain legal advice about your particular case.
- 11. A credit card company has just sued me, but the lawsuit isn’t in a Texas Court, it’s in another state. If I live in Texas can they still sue me in another state?
- Probably. When you originally signed for the credit card, you may have agreed that all lawsuits would be brought in a particular state. This is sometimes referred to as a forum selection clause. If they sued you in another state, they probably did it for a reason which is more often than not because of a forum selection clause. It is usually in the fine print on the credit card application that most people don’t take the time to read. Keep in mind that whatever state you are sued in, filing for bankruptcy will still stop the lawsuit.
- 12. I just received something from an old credit card debt that looks like a lawsuit but says it’s an arbitration forum proceeding. Is it a lawsuit, and can I get rid of it if I file bankruptcy?
- If you have fallen behind on credit card bills for what ever reason and did not respond to the credit card company’s notices, you may be subject to a arbitration proceeding. An arbitration proceeding is not a lawsuit. The American Arbitration Association (www.adrworld.com) defines arbitration as an out-of-court means of dispute resolution with a neutral third party deciding the case. In essence, it’s a way to avoid the litigation process and have a 3rd party decide the outcome of your non-payment, dispute, or other problems with the account. Most major credit card companies have added mandatory arbitration clauses to their contracts. It is possible to remove an arbitration proceeding to a court of law. It’s very important to open all of your mail and seek legal advice when you don’t understand something. Many people who ignore their mail later find themselves getting an Arbitration Award rendered against them which can become a judgment attaching to property as in an actual lawsuit. Filing bankruptcy can eliminate arbitration awards.
- 13. Is bankruptcy the best option to stop a lawsuit?
- It can be, but that depends on your particular set of facts and circumstances. Filing for Bankruptcy to Stop a Lawsuit is good for some and bad for others. There may be more effective means to deal with a lawsuit as opposed to filing for bankruptcy straight away. Every lawsuit has a different set of circumstances, as does every person being sued, so it is always good advice to seek legal counsel if you have been sued.
If you have been sued, don’t just ignore it. If you live in Austin, Houston, San Antonio, or Dallas, or most anywhere in the State of Texas contact the Texas Bankruptcy Lawyers at The Law Offices of R.J.Atkinson for a free bankruptcy evaluation to see how we can help you with the lawsuit. We may be able to help you file for bankruptcy to stop the lawsuit, discuss your bankruptcy alternatives, or help you to defend the lawsuit if it’s best for your situation. Our Texas Bankruptcy Lawyers welcome the opportunity to discuss your legal options.
Bankruptcy Lawsuit Questions — Stop Lawsuit — Stop Lawsuits — Texas Bankruptcy Law
Call the Texas Bankruptcy Lawyers at: 800-436-9056