Law Suit Pending & Bankruptcy
November 3rd, 2009 by Questions
We have been involved in a law suit for the past several years. Our trial date is not for another six months. I am confident that we will win or receive an offer to settle. If I file for personal bankruptcy before this is resolved, how does this affect my lawsuit? If a win or settlement is agreed to, there will be no dollar gain to it…. Simply trying to get what I paid for in the first place and having costs covered. Any penalties or reprocusions?
Posted from: Ontario
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November 04, 2009 at 6:37 am, A licensed trustee said:
Be very careful – if you file for bankruptcy then your interest in the lawsuit vests (transfers) to your trustee. Your trustee will not be interested in pursuing the suit and will settle quite quickly with the other side. The funds received will be paid to your trustee for the benefit of your unsecured creditors (ie the money won’t be payable to you).
Speak to your lawyer about all of this before you speak to a trustee. If your lawyers knows how dire your financial situation has become they may be able to settle more quickly (although likely for a lessor amount).