What if a creditor has sued me, and won, before I file for bankruptcy?
Often it takes experiencing a drastic financial setback for someone to finally consider bankruptcy as an option. This can be a threat of foreclosure or eviction from your home, repossession of a vehicle, or being sued by a creditor for non-payment of a debt. The stigma around bankruptcy sometimes causes people to wait until the most desperate circumstances to take action. But at ELC we believe that if your resources are overwhelmed by your debt load, filing for bankruptcy sooner can avoid these costly and stressful situations. We will discuss important timing issues in your free consultation, but in general being proactive about your debt is the way to go.
However, even if you have been sued by a creditor, all hope is not lost and you can fight back. If a creditor has sued you for payment and won, and if you didn’t have the available funds to pay off the judgment directly, the court may have issued what is called an “abstract of judgment.” This abstract of judgment creates a lien on any property you may own, meaning if you try to sell the property, you will be required to pay the creditor from the proceeds of the sale, plus interest.
When you file for bankruptcy this court-ordered lien can be removed, but it requires filing a special motion. If you have an abstract of judgment issued against you, and you own property in the county where the abstract of judgment applies, let your attorney know so we can file this motion.
Have you been sued or has a creditor threatened you with legal action?
Stay tuned for more blog posts covering some of the other frequently asked questions about bankruptcy. We love sharing our expertise about bankruptcy so visit our Why Bankruptcy menu on our home page for more valuable information, including some of the FAQs and Dos and Don'ts we've already posted.
As always, and with all information on EnrightLawCenter.com, this post should not be considered legal advice, and without a written agreement you have not established an attorney-client relationship. Every case is different and we highly recommend consulting with a bankruptcy attorney before taking any action.