How Bankruptcy Affects Other Pending Legal Actions


One of the biggest worries someone may have if they need bankruptcy law services while working through other legal matters is how the two situations might affect each other. Fortunately, bankruptcy law is written with most of these sorts of concerns in mind. Let's take a look at what might happen in four different situations.

Garnishments

Most garnishments are halted if you file for Chapter 7 or 13 bankruptcy. Notably, past-due child support and alimony garnishments will not be stopped under Chapter 7, but they may be halted under Chapter 13. Be aware, however, that a Chapter 13 repayment plan is a promise to pay up according to the plan, and that may accelerate the payment process in some cases.

Similarly, most garnishments for student loans will continue. The exception is if you can prove extreme hardship.

Lawsuit Settlements and Judgments

If you are the recipient of a settlement or judgment, it might be protected during bankruptcy. Conversely, folks who've been ordered to pay may request that the court order halt payments. This is because the person who sued you becomes a creditor upon the conclusion of the case.

Things get trickier if you're in the process of being sued while you're also petitioning for bankruptcy relief. A judge assigned to the suit may order that it can continue in the interest of justice. It may be better under such circumstances to delay filing for bankruptcy until the case is concluded.

Criminal Penalties

In cases involving criminal penalties, it depends on the type of bankruptcy you file for. Under Chapter 7, fines are not discharged. However, you may be able to restructure them as outstanding debts under Chapter 13.

Some reimbursements ordered by the court may be dischargeable. This usually involves payments that weren't intended as punishment. For example, the city might have received reimbursement for cleaning up a wall that was tagged. This debt can be discharged.

Matters Not Involving Money

As a general rule, a legal issue that doesn't involve money will proceed even if you've retained bankruptcy attorney services and gotten a stay. The bankruptcy court, however, may provide you with a scheduling excuse in other cases. You'll need to inform both of the courts of what your situation is, and arrangements will then be made accordingly to make sure you can attend hearings on both dockets. Do not abuse this to get out of things, though, or one of the judges may come down on you.

About Me

Goodbye Bad Debt. Hello Good Life.

Debt is not always your fault. Sometimes something unexpected happens, like job loss or a bad illness, and the bills just pile up faster than you're able to handle. Eventually things settle down and you think your life is back on track again, but you still find yourself unable to pay those sky-high bills. Declaring bankruptcy is usually an option. It can help you move on, not only financially, but mentally. There are several types of bankruptcy that are allowed under U.S. law, and you'll need to meet with a bankruptcy attorney to find out which one you are most likely to qualify for. We share more information about this and related bankruptcy attorney topics on this website, so dig right in and start reading.

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