Can Filing Bankruptcy in Nevada Stop a Pending Lawsuit?
Can Filing Bankruptcy In Nevada Stop a Pending Lawsuit?
Someone who struggles with debt may be waiting for some final push that is the sign that it’s time to file for bankruptcy. Receiving notice that one of your creditors has filed a lawsuit against you may be the push you finally need. You also could be in a pending lawsuit from a plaintiff besides one of your creditors. Whether or not bankruptcy will help will depend on the specifics of your situation. The best way to know how bankruptcy can impact your lawsuit is by speaking with an experienced bankruptcy lawyer. To learn more, call to schedule your free consultation with our firm at 702-370-0155.
Is It Too Late For Bankruptcy Once a Lawsuit Has Been Filed?
Being in a pending lawsuit doesn’t disqualify a debtor from declaring bankruptcy. In fact, many people file for bankruptcy because they are in a pending lawsuit. Filing bankruptcy will temporarily stop many types of lawsuits, but others will proceed regardless of a bankruptcy case’s status. It also may not be too late to file bankruptcy after a plaintiff has secured a judgment against you in a lawsuit. However, there are usually several benefits to filing bankruptcy before a judgment is finalized. Read on to learn more.
Does Filing Bankruptcy Stop an Eviction?
Technically, an eviction is a civil lawsuit. That means that filing for bankruptcy can at least temporarily pause eviction proceedings. However, the eviction can’t have passed a certain stage for bankruptcy to be effective. If you are being evicted for nonpayment of rent, the process usually looks something like this:
Receive a notice that you are late on rent, it will usually include a deadline to catch up to the current.
If you don’t pay the rent due by the deadline, your landlord must next file the eviction with the court.
You will receive a summons to appear in court regarding the eviction. These generally take place fairly quickly but could be delayed based on how busy the court is.
Appear in court and argue why you shouldn’t be evicted. If you don’t appear, the landlord will obtain a default judgment for possession against you. This is the point where it is too late to save your rental from bankruptcy.
Leave before the period stated on the writ of possession or be escorted off the property by police.
If you file your bankruptcy before the court has issued a judgment for possession against you, the eviction proceedings will be paused. A Chapter 7 will only pause the eviction until the bankruptcy case has concluded- typically 3 to 6 months. Chapter 13 will pay off your back rent over a period of 3 or 5 years, during which you will be protected from evictions and other lawsuits.
How Do Bankruptcy Stop Lawsuits in Nevada?
The reason that bankruptcy can stop lawsuits is because of the automatic stay. The automatic stay protects debtors that file for Chapter 7 or Chapter 13 bankruptcy. These protections apply to a variety of things, like wage garnishments, repossessions, and most relevant here, lawsuits. The automatic stay should remain in effect until the bankruptcy is discharged or dismissed. However, there are some exceptions. For example, if your wages are being garnished for child support, a Chapter 7 bankruptcy filing won’t stop the wage garnishment. Additionally, if you file bankruptcy more than once in a 12-month period, your stay could be limited to only 30 days, or you might not be protected by the automatic stay at all. This is known as an exploding stay- talk to a bankruptcy attorney for more information if you are considering filing a second or third bankruptcy petition in a 12-month period.
Another possible exception to the automatic stay is if your creditor(s) files a petition for relief from the automatic stay. This is an adversary proceeding that will require a hearing in addition to the mandatory hearings based on the chapter you file. This is essentially a creditor’s objection to your bankruptcy, or at least to their debt being discharged by your filing. There are some presumptions about pre-bankruptcy spending that could weigh in favor of the creditor which would require a strong argument in court. Other times, the circumstances may be more in the debtor’s favor. Either way, you should have a skilled bankruptcy attorney’s representation if any of your creditors file a motion for relief from the automatic stay.
Which Lawsuits Bankruptcy Can & Can’t Stop
Bankruptcy can stop a variety of legal proceedings, but not all of them. The most common type of lawsuit that people file bankruptcy over is a lawsuit from a credit card company. Other types of creditors can file lawsuits against debtors who don’t make their payments as well. Bankruptcy can also pause business disputes, such as breach of contract. If a lender is about to repossess your vehicle or foreclose your home, this will also be halted by a bankruptcy filing. As mentioned above, bankruptcy can stop evictions in certain phases.
Not all lawsuits will stop when a debtor declares bankruptcy. Filing bankruptcy will do nothing to stop or pause a criminal prosecution. You can’t file bankruptcy to evade family law proceedings, including child support and child custody matters. As previously mentioned, bankruptcy can’t stop an eviction if the landlord has already secured a judgment for possession. If you are in the midst of a lawsuit and want to know the effect that filing for bankruptcy will have, call our firm for your free consultation at 702-370-0155.
Filing Bankruptcy Before vs. After a Judgment is Secured
If your lawsuit is debt-related, ideally you would foresee the lawsuit and declare bankruptcy before that lawsuit is even filed. This isn’t always possible. But whenever possible, you should file your bankruptcy petition before the lawsuit has been decided upon, rather than after. There are several reasons why this is advantageous. First, this prevents the judgment from ever being entered against the defendant/debtor. This is already a negative mark on one’s credit history, but the creditor could use the judgment for a variety of collection methods. Some creditors, like banks, will use the judgment to levy your bank account, deducting from your account however much it takes to pay your balance. Your creditor could also place a garnishment on your wages, letting your employer know about your debt situation and automatically deducting a substantial portion of each paycheck before you receive it. Your creditor could even put a lien on your property. This is an issue because it makes unsecured debt into secured debt. Whichever asset the lien is placed upon is the “secured” asset, and a Chapter 7 bankruptcy won’t clear secured debts and liens. Another potential benefit is if you file before a judgment is secured, it reduces the risk that your debt will be found to be fraudulent and therefore non-dischargeable.
High-Quality Nevada Bankruptcy Representation at Low Prices
When you’re considering bankruptcy due to a lawsuit, you probably don’t have much wiggle room in your budget for legal costs. That doesn’t mean that you don’t deserve quality bankruptcy representation that will deliver positive results. At Las Vegas Bankruptcy Lawyers, you can rest assured knowing your case is in capable hands. We also offer innovative payment options, including payment plans starting as low as ZERO DOLLARS DOWN. Call today for your free consultation at 702-370-0155.