Will filing for bankruptcy take care of my lawsuit? 24 Answers as of August 04, 2011

A former business deal went sour and the guy is suing me for a promissory note. The case is now pending. The amount is too huge that I can't afford to pay if I lose. I'm considering filing for Chapter 7 (and will qualify because all my debts are business related) but am worried that the trustee might "step into the shoes" of the creditor and demand me to pay nonetheless, which defeats the purpose of filing for bankruptcy. What should I do or expect? Should I file for Chapter 7? I have no assets and am flat out broke. Thank you for your time.

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Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
Bankruptcy protects the debtor from continuing efforts at collecting a debt that is subject to discharge. In Chapter 7, you will get the benefit of the discharge of this type of debt and if you have no assets that are "non-exempt" then you will be able to keep everything and will not be asked to pay anything back to creditors of this type.
Answer Applies to: Indiana
Replied: 8/4/2011
Breckenridge and Walton
Breckenridge and Walton | Alan D. Walton
Talk to an attorney! You have concluded that you will"qualify" for a chapter 7, maybe an expert ought to make that decision! When you file for chapter 7 you are jumping out of an airplane - do you want to be sure there is a parachute on your back? You cannot get back to the plane, so an attorney's advice is an absolute necessity. You should expect that you will be taken to the cleaners without competent guidance.
Answer Applies to: Michigan
Replied: 7/29/2011
Cartwright Law Firm
Cartwright Law Firm | Andrea Cartwight
One of the most immediate effects of Chapter 7 bankruptcy protection is the automatic stay provision, which generally prevents creditors from collecting debts from you. Under the automatic stay, creditors are not allowed to call you or send you collection letters. They also cant take or continue any legal action against you, which including continuing the lawsuit. Once the bankruptcy is file, the lawsuit must stop unless the Plaintiff obtain relief from the automatic stay. The role of the trustee in a Chapter 7 case is to administer your bankruptcy case, which includes to liquidate any non-exempt assets or stand in your shoes in you were suing someone to collect money or recover property. The Trustee role is not to pursue actions against the debtor unless it is to undo fraudulent and/or preferential transfers made by you prior to filing the bankruptcy petition. It is important to seek legal advice from a bankruptcy attorney concerning the pending lawsuit to make sure that the allegations contained in the lawsuit would be dischargeable.
Answer Applies to: Michigan
Replied: 7/27/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Chapter 7 is for people who are broke. The trustee will not take this litigation. Go see a lawyer and put this behind you.
Answer Applies to: California
Replied: 7/27/2011
Colorado Legal Solutions
Colorado Legal Solutions | Stephen Harkess
The Trustee will not seek to enforce an unsecured promissory note against you. There are some types of debt which are not dischargable, but in most cases a promissory note that was entered into without fraud will be discharged in bankruptcy.
Answer Applies to: Colorado
Replied: 7/27/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    A Chapter 7 bankruptcy will discharge all of your debts. The trustee is entitled to your non-exempt assets, but if you are, as you say, flat broke, this should not be a problem for you.
    Answer Applies to: California
    Replied: 7/27/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Yes, filing BK will stop that lawsuit.
    Answer Applies to: California
    Replied: 7/27/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    Yes. It sounds like the chapter 7 would work fine for you. The trustee cannot step into the shoes of the creditor he can only step into your shoes. He will only do this if it means a potential gain for the Bk estate. You need to know that if the complaint alleges any type of fraud or breach of a duty these causes of action may not be dischargeable. Do yourself a favor and consult with an attorney about the types of allegations in the lawsuit.
    Answer Applies to: California
    Replied: 7/27/2011
    Mauritz Van Niekerk, Attorneys at Law
    Mauritz Van Niekerk, Attorneys at Law | Christiaan van Niekerk
    If you are broke they will have no purpose suing you and yes a bankruptcy will take care of the debt
    Answer Applies to: New York
    Replied: 7/27/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    One reason for filing chapter 7 bankruptcy is that you are being sued. In a chapter 7ifyou are suing the lawsuit is considered an asset that is owned by the trustee. When you are being sued the trustee does not pursue the lawsuit against you, rather it is discharged (wiped out.)
    Answer Applies to: California
    Replied: 7/26/2011
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    The trustee steps into the shoes of the debtor, so to speak. He does not represent any one creditor, nor does he continue collection efforts on their behalf...what would be the point of bankruptcy ever? You sound like a solid Chapter 7 case.
    Answer Applies to: California
    Replied: 7/26/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    Your question reveals many misconceptions about bankruptcy. The trustee does not represent the creditors as a collector on lawsuits. And whether you qualify to file bankruptcy or not is based on many things other than whether your debts are business or personal. Whether the debt in the suit is dischargeable or not depends on the specific nature of the debt and how it arose. Most debts are dischargeable; some are not. Neither bankruptcy nor the defense of large business lawsuits are pro se projects. You need a lawyer. See one ASAP.
    Answer Applies to: Georgia
    Replied: 7/26/2011
    Everett Walton, Attorney at Law
    Everett Walton, Attorney at Law | Everett Walton
    If the suit is for payment of an unsecured promissory note only, it will be discharged in bankruptcy.
    Answer Applies to: Hawaii
    Replied: 7/26/2011
    Engberg Law Office
    Engberg Law Office | Harry A. Engberg
    Filing Chapter 7 will handle the law suit unless he can prove fraud on your part. The Trustee is looking for assets that will pay them money for creditors. This is not your asset, but the ex-partners asset.
    Answer Applies to: South Dakota
    Replied: 7/26/2011
    Burnham & Associates
    Burnham & Associates | Stephanie K. Burnham
    It is not the role of the Trustee to "step into the shoes" of any creditors. It is the Trustee's role to examine the Petition and to make an investigation into any of the Debtor's assets to determine if there are any to pay the creditors. Lawsuits are creditors and as a result will go away through the Chapter 7 process.
    Answer Applies to: New Hampshire
    Replied: 7/26/2011
    Guerrieri & Cox
    Guerrieri & Cox | Michael A. Cox
    Filing a bankruptcy will initiate an automatic stay that will effectively freeze all civil suits against you. Assuming everything is properly filed in your bankruptcy case, you would ordinarily receive a discharge of all personal obligations in a Chapter 7, with the exception of certain tax debts, student loan debts, domestic support debts, and a handful of other less-common debts. If the creditor is suing over an ordinary promissory note and there are not allegations of fraud or misrepresentation, then I would expect that debt to be discharged. The creditor has the right to sue for an exception to your discharge if he can prove fraud or misrepresentation, but he could end up liable to you if he does not file such a suit in good faith. The trustee steps into the shoes of the debtor, not the creditors.
    Answer Applies to: Ohio
    Replied: 7/26/2011
    Tucker Legal Clinic
    Tucker Legal Clinic | Samuel Tucker
    Yes, a Chapter 7 will stop the lawsuit.
    Answer Applies to: Mississippi
    Replied: 7/26/2011
    Uriarte & Wood, Attorneys at Law
    Uriarte & Wood, Attorneys at Law | Robert G. Uriarte
    The Trustee does not step into the shoes of the creditor on this kind of a claim. It is a mere contractual claim that should be discharged. Make sure you get comptetent counsel to file the Bankruptcy for you to review the allegations in the state court complaint to ensure there are no other issues for you to worry about.
    Answer Applies to: California
    Replied: 7/26/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    You present two different, but related issues. First, if your debts are primarily business debts, then there is no means test income requirement for filing Chapter 7. You have to include all of your debts, personal credit cards included - you can't pick and choose just to make it a business debt case. If your debts are in fact primarily business related, then filing Chapter 7 will work. The only instance where the Trustee "steps into your shoes" is where someone owes you money and has them pay the trustee rather than you, not when you owe someone else money. If your concern where the case, then no one could file bankruptcy as the trustee would demand the debts you are seeking to discharge be repaid.
    Answer Applies to: California
    Replied: 7/26/2011
    Ray Fisher Law Offices
    Ray Fisher Law Offices | Ray Fisher
    Question: Will filing for bankruptcy take care of my lawsuit? Question Detail: A former business deal went sour and the guy is suing me for a promissory note. The case is now pending. The amount is too huge that I can't afford to pay if I lose. I'm considering filing for Chapter 7 (and will qualify because all my debts are business related) but am worried that the trustee might "step into the shoes" of the creditor and demand me to pay nonetheless, which defeats the purpose of filing for bankruptcy. What should I do or expect? Should I file for Chapter 7? I have no assets and am flat out broke. Thank you for your time. First you should consult a bankruptcy lawyer about this. The Trustee will never take the case on behalf of a creditor and try to make you pay. The Trustee steps into your shoes and will assert any claims you may have against the creditor. You sound like a good candidate for chapter 7. Depending on the nature of the claims against you in the suit, you may have some issues over whether those claims can be discharged. Those are issues to talk to a lawyer about.
    Answer Applies to: Texas
    Replied: 7/26/2011
    Jackson White, PC
    Jackson White, PC | Spencer Hale
    If it is just a simple contract dispute and your ex-business partner claims you owe him money for breach of contract, you will likely be able to discharge it in bankruptcy. One thing to keep in mind is that just because the majority of debts are business related, does not mean that you automatically qualify for a chapter 7.
    Answer Applies to: Arizona
    Replied: 7/26/2011
    Law Office of Eric Ridley
    Law Office of Eric Ridley | Eric Ridley
    Frankly, a chapter 7 analysis is one of those things that should be done by your bankruptcy attorney. In order to to an adequate analysis the attorney needs to know more than you posted here. However, if Chapter 7 turns out to be appropriate, then most debts will be erased during the process.
    Answer Applies to: California
    Replied: 7/26/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    If you signed personally for the debts, you can file bankruptcy on them. If the business is still ongoing and showing any promise the trustee may want to step into your shoes, but you should be released in the absence of any fraud. Have a lawyer do it for you because there will be additional steps you'll need to take.
    Answer Applies to: Virginia
    Replied: 7/26/2011
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