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How is pending court case affected by bankruptcy?

My ex-husband and I still run the business together that we built while married. We have a large debtload that we are trying to pay off and have considered bankruptcy, but we are making enough money to pay off the debts eventually and would rather do that. However, there is a court case pending (we are in a group of four defendants) for which mediation is scheduled next month. We have informed the claimant’s counsel that there is nothing to recover from us. If we are found liable there is no way we can pay and a judgement against us could be the final push into bankruptcy. If we file either a creditor’s proposal or bankruptcy now, how does that affect a pending legal case? If we wait to see what the judgement is, and decided to file either a creditor’s proposal or bankruptcy then, how would that affect the judgement?

One Response to “How is pending court case affected by bankruptcy?”

Barton Goth GCO Bankruptcy Trustees said...

This is largely dependent on the type of action you are facing. This is important as the Bankruptcy and Insolvency Act contains a prescribed list of debts that cannot be cleared by the filing of a bankruptcy. As a result, the best thing for you to do is to contact a local trustee and have them review all the details available regarding this lawsuit. This way you will be able to confirm how this potential judgment will be treated if a bankruptcy is filed.