Filing for Bankruptcy before Judgement to Prevent Lien

Posted by Joseph Franks on September 24th, 2019

Speaking of pending lawsuits or judgments, filing for bankruptcy puts an immediate effect on these judgments. Filing for bankruptcy before the court judgments have its one certain benefits, such as prevention of the enforcement or issuance of a decision.

Lawsuits in Bankruptcy:

Lawsuits are considered as a method for the creditor to contact the court to issue orders against the accused that he or she owes the creditor a certain amount of money. In few cases, the defendant does not respond to the lawsuit filed by the creditors or other people for instance victims of personal injury. This can lead to default judgment by the court against the person when the defense may have been workable.

The Action of Enforcement:

Before the plaintiff put forward lien against a property or house when it was not used, it is important to secure a judgment against the defendant. This needs filing and proving the case or winning. Once the creditor receives the judgment, the enforcement action is sought. This involves, an attempt to garnish the person’s wages, seizing his or her assets in the defendant’s accounts, or putting a lien on his or her property. Once the lien is placed, the defendant cannot sell the property before paying the lien.

Issuance of Automatic Stay:

Once a bankruptcy petition is filed, the court issues an automatic stay. This order refers to the command to prevent others to seek collection or file a lawsuit. This protects the person against creditors who have filed a lawsuit and other pending cases. The automatic stay holds the case until the bankruptcy issue is resolved. A notice regarding the bankruptcy proceedings is sent to the defendant’s creditors that include persons, companies involved in pending cases.

Discharge of the Debts:

During the bankruptcy process, if the debt is discharged, the debt does not exist legally as well as the creditors cannot seek to recover the debts in court. In addition to it, the creditors cannot seek the collections, like levying the defendant’s assets or garnishing his or her wages. But it happens if the debt is dischargeable; in case of non-dischargeable debt, the creditors pursue the claim and recover their money. For instance, protection against child support is not approved in bankruptcy; medical bills or tax-related debts are dischargeable.

Impacts on the On-Going Lawsuits:

When there is a lawsuit already in place, a bankruptcy can put an impact on the proceedings of the case. In case there is wage garnishment, the bankruptcy can stop it from proceeding further. Any current judgment against a debtor does not prevent the person from filing bankruptcy.

Benefits of Filing Bankruptcy before Court Judgement:

Before a judgment is secured, there are many options available. In addition to it, if a person files bankruptcy before the court judgment is announced, activities such as assets levied or wages garnished are prevented. If there is a lien placed against debtor’s property, it needs further steps and fees before it is removed. If the bankruptcy is filed before lien it prevents in taking further actions and paying additional fees.

Legal Assistance:

In case of lawsuits from the creditors, it is very important to consult a legal expert who helps the debtor assessing various options and recommends further actions based on the facts and circumstances.

Author Bio:

California Bankruptcy Attorneyhave dedicated their lives to the craft and stand by your side throughout the entire case, should you have any questions or concerns about the process.