Sued by creditor
May 24th, 2005 by Questions
One of my creditors is suing me in a court of law for debt recovery. If a judgement is handed down before my bankruptcy takes effect, will the bankruptcy release the indebtedness? Or will I still be liable for the full amount owed?
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May 30, 2005 at 2:03 pm, A licensed trustee said:
The short answer is that your bankruptcy should deal with the judgment.
If instead of a judgement your creditor applies for a Restition Order then your bankruptcy won’t help. Restitution Orders are used when a person has damaged/destoyed another person’s property (for instance you burn down your neighbours garage). They are not used to reclaim bad debts so if the lawsuit is for some sort of economic loss then a judgement is the likely result.
Something else to consider – the creditor suing you has the right to oppose your discharge from bankruptcy. If the creditor can demonstrate that you deliberately increased the legal costs to the creditor knowing that you were going to file bankruptcy they might use that fact to cause your bankruptcy to be extended. If you are certain that you are going to file bankruptcy you should advise the lawyer for the creditor so they can minimize their costs (and therefore reduce the chance that they will oppose your discharge).