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

If the suit is for payment of an unsecured promissory note only, it will be discharged in bankruptcy.

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.

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.

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.

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.

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.

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.

Yes, a Chapter 7 will stop the lawsuit.

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.

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.

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.

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.

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.