Bankruptcy & Lawsuits in Nevada
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Bankruptcy & Lawsuits in Nevada
If you have been sued by a creditor over a debt, you are likely feeling overwhelmed. If and when a creditor wins their lawsuit, they can recover money from you through wage garnishments and bank account levies, making your tough financial situation that much harder. Filing for bankruptcy can put an immediate end to any lawsuits and it may help you discharge your debts completely for a fresh start.
Bankruptcy Stops Lawsuits
Filing for bankruptcy can delay or stop creditor lawsuits regardless of how far along the lawsuit has gone. The effect of bankruptcy on the lawsuit against you and the underlying debt depends on the claims in the lawsuit and whether you file Chapter 7 or Chapter 13 bankruptcy.
When you file for bankruptcy, you will be immediately protected by the automatic stay, a court injunction that stops most types of creditor actions, including lawsuits, garnishments, and levies. This automatic stay remains in effect until your bankruptcy is discharged, your case is dismissed, or the court lifts the stay upon request by a creditor and with good cause.
What Happens to a Lawsuit?
If you file Chapter 7 bankruptcy and the underlying debt in the lawsuit is discharged, the creditor may no longer collect the debt from you and the lawsuit will be dismissed with no further action against you.
In Chapter 13 bankruptcy, on the other hand, you pay back some of your debts through a repayment plan over 3-5 years. The debt in the lawsuit will be treated like other debts of the same type in your case. If your repayment plan is completed and you get a discharge, the underlying debt will be discharged and you will no longer owe the money. If you fail to make the plan payments as agreed and your bankruptcy case is dismissed before discharge, the automatic stay protection ends and the lawsuit can resume.
What Happens to a Judgment?
If you have already been sued and the creditor has received a judgment against you, it is possible to discharge your liability for the judgment through a Chapter 7 bankruptcy as long as the underlying debt is dischargeable.
There are some debts that cannot be discharged, such as child support and spousal support obligations and personal injury damages due to a DUI. Some debts, such as student loans, are difficult to discharge but it is possible. There are other types of debts that can be excepted from bankruptcy discharge if the creditor files an objection. This is usually the case in debts due to injury caused by malicious or willful acts; fraud used to obtain goods, services, or money; and debt due to fraud committed while in a position of trust.
If the judgment is on credit card debt, medical debt, and most types of unsecured debt, it can be discharged along with your other debts and you will no longer be responsible for the judgment.
Contact a Las Vegas Bankruptcy Lawsuit Attorney
If you are facing a lawsuit from a creditor or your creditor has already obtained a judgment, filing for bankruptcy can protect you from collection actions and potentially get the debt discharged completely to give you a fresh start financially. Time is of the essence, however, to avoid wage garnishments and other consequences. Contact Aaron Law Firm today for a free consultation with a bankruptcy lawsuit lawyer in Nevada who can answer your questions and help you determine if bankruptcy is the right choice for you.