Do we qualify for bankruptcy if the lawsuit was for a business we purchased and had to default on? 17 Answers as of July 11, 2014

In a lawsuit, my husband and I settled on an amount of $40,000, $20,000 down, $1,000 a month for 20 months. We paid the $20,000 down and have paid $4,000 of the monthlies. Well, my payment is late this month, because we've had some medical issues in the family, so now they added an extra $20,000 as the stipulation called for. I'm thinking of just filing bankruptcy on the remaining $16,000 and now the extra added $20,000. This judgment is in the state of California, we live in Washington State. We own our house outright. I was wondering if we can qualify for a bankruptcy (the lawsuit was for a business we purchased and had to default on).

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Stephens Gourley & Bywater | David A. Stephens
You probably can.
Answer Applies to: Nevada
Replied: 7/11/2014
Law Office of Peter M. Lively
Law Office of Peter M. Lively | Peter M. Lively
From the facts you provided the breached settlement agreement appears to be subject to discharge. However, owning your house free and clear of liens might mean that your exemptions to not fully cover your assets and Chapter 7 may not be advisable. You need a consultation with a bankruptcy attorney to review all of your assets, debts, income and expenses.
Answer Applies to: California
Replied: 7/11/2014
David R. Fondren, Attorney at Law
David R. Fondren, Attorney at Law | David R. Fondren
This is not a Missouri case.
Answer Applies to: Missouri
Replied: 7/11/2014
Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
Because you live in Washington state you should contact a knowledgeable local bankruptcy attorney for help. If you own your home, you might have too much equity to protect in a bankruptcy. Please go and meet with a local knowledgeable bankruptcy attorney to find out what your options are. This is a California forum.
Answer Applies to: California
Replied: 7/11/2014
John Ceci PLLC
John Ceci PLLC | John Ceci
I am not licensed to practice in either of those States. You should consult with a bankruptcy attorney where you live.
Answer Applies to: Michigan
Replied: 7/11/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    A civil judgment is dischargeable in bankruptcy, and the Washington homestead exemption allows you to protect up to $125,000 of value in your home. So, if your home exceeds that value, you might consider filing a Chapter 13 which would allow you to "pay for" the non-exempt value over a period up to 5 years. Your "non-exempt assets" would set a minimum you would have to pay, also referred to as the "best interest of creditors number" because it defines what the creditors would be able to get in a Chapter 7 liquidation. If your homestead does not exceed the maximum, then you might be eligible for a Chapter 7 depending on your income and other assets.
    Answer Applies to: Oregon
    Replied: 7/10/2014
    EDWARD P RUSSELL | EDWARD P RUSSELL
    It sounds like the debt is dischargeable in bankruptcy.? If your business was incorporated then the corporation should file bankruptcy; if not then you should personally file bankruptcy.
    Answer Applies to: Minnesota
    Replied: 7/10/2014
    Marc S. Stern
    Marc S. Stern | Marc S. Stern
    Qualification for bankruptcy isn't the issue. It is impossible to tell whether you would pass the means test from the information given. More importantly, what is the house worth? What are the other assets worth? You might file a bankruptcy, get the discharge, and have your house sold by the trustee. Much more information is needed. You need to seek the advice of a competent bankruptcy lawyer and discuss the matter with them.
    Answer Applies to: Washington
    Replied: 7/10/2014
    Law Office of Pho Ethan Tran PLLC
    Law Office of Pho Ethan Tran PLLC | Pho Ethan Tran
    Business related debts are also dischargeable in bankruptcy as long as there was no finding of fraud in the dispute.
    Answer Applies to: Texas
    Replied: 7/10/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    You need to see a Washington lawyer ASAP. You ability to file depends on the Washington homestead exemptions.
    Answer Applies to: California
    Replied: 7/11/2014
    Danville Law Group | Scott Jordan
    Yes, you can file bankruptcy. You must do so in Washington.
    Answer Applies to: California
    Replied: 7/10/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    You need to see a Washington state bankruptcy attorney to determine what the outcome of a bankruptcy would be.
    Answer Applies to: California
    Replied: 7/10/2014
    Law Offices of Linda Rose Fessler | Linda Fessler
    You may have too much equity in your house to qualify for a bankruptcy.
    Answer Applies to: California
    Replied: 7/10/2014
    Ronald K. Nims LLC | Ronald K. Nims
    Washington State has a $125,000 homestead exemption - I'm not an expert in Washington law but that generally means that a married couple have two $125,000 exemptions for a total of $250,000. As long as your house isn't worth more than $250,000, you can file bankruptcy in Washington discharge the debt for the business and keep your house.
    Answer Applies to: Ohio
    Replied: 7/10/2014
    DUSTIN DEISSNER
    DUSTIN DEISSNER | DUSTIN DEISSNER
    You should be able to file bankruptcy on that claim based on what you say here. Doesn't matter that it was a business debt.
    Answer Applies to: Washington
    Replied: 7/10/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    You should speak to a local bankruptcy attorney that knows the bankruptcy laws in your district.
    Answer Applies to: New York
    Replied: 7/10/2014
    Idaho Bankruptcy Law | Paul Ross
    I don't know Washington law, but I would want to know more about the judgment and what the agreement was on. Generally, it sounds like it would be discharged in the bankruptcy. Moreover, if you file soon enough, the Trustee can recover some of the funds paid to the creditor and distribute it to other creditors.
    Answer Applies to: Idaho
    Replied: 7/10/2014
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