If you have recently been involved in a lenghty lawsuit and are now required to pay damages or fines, it’s not unlikely that you are struggling to devise a way to pay all the money you now owe. In addition to your regular monthly expenses, the added cost of court fees, legal representation, and now this latest judgment can be financially crushing. Although you may have never thought of it before, it could be a wise idea to consider filing for bankruptcy. If being involved in a lawsuit has caused you to accrue debts that you cannot manage to repay, then you may be surprised at how filing can take these debts off of your plate.
Money that you owe someone as the result of a lawsuit is considered an unsecured debt and can therefore become discharged, explains attorney Russ B. Cope. In a Chapter 7 bankruptcy, this means that the money you owe from a lawsuit will be liquidated along with the other unsecured debts you have acquired from various sources, such as credit cards. If you are filing for Chapter 13, however, then the money that you owe from the judgment will be included in your repayment plan, and you will pay a percentage of the debt owed over the course of three to five years. As a bankruptcy attorney in Dayton, OH, Cope says that structuring your repayment plan can become quite complicated and should be done with the help of an experienced lawyer.
To be clear, however, while judgments and lawsuits can be discharged, court fines and fees cannot. Those amounts must be paid in full and cannot be included in your Chapter 13 plan either. Even in bankruptcy, he explains, you still have an obligation to the court system and the IRS. Furthermore, bankruptcy cannot be applied to judgments stemming from child support cases and money awarded for intentional damage to others are non-dischargeable. For many debtors, even with these small exceptions, bankruptcy is still an effective option because it clears debts acquired from past lawsuits.
Typical lawsuits that are discharged in bankruptcy include:
- Lawsuits for credit card debt collection
- Lawsuits on second mortgages and vehicles
- Lawsuits for unpaid medical, legal and other bills
- Lawsuits for business and personal debts
- Personal injury lawsuits
In addition to past lawsuits, bankruptcy will also immediately stop any lawsuits from being filed. If a lawsuit is pending at the time of your filing, it cannot proceed. And lastly, if a creditor has a judgment that is garnishing your wages, the garnishment can be stopped.
Once you are in debt, it is possible for your creditors to file a lawsuit against you, and the more you struggle to pay back your debts, the less money you will have to provide for your family. Your best bet is to find a solution sooner rather than later, and that solution may very well be bankruptcy.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Neither publication of this article nor your receipt of this article create an attorney-client relationship.