My Creditors Are Suing Me – Is it Too Late to File Bankruptcy?
If you have put off filing for bankruptcy so long that your creditors are already suing you, you may fear that it is too late to do anything about it. You aren’t alone. Most people wait until the very last minute before they seriously consider bankruptcy as an option. It seems to be human nature to postpone what you don’t want to deal with and in most cases, bankruptcy falls directly into that category. But assuming it’s too late to file would be a mistake. As long as you are eligible to file under one of the bankruptcy chapters, you can take care of debts owed even if a creditor or creditors have already filed a lawsuit against you or after a judgment has been entered against you.
First for the basic definitions involved. A creditor is anyone who thinks they are owed money. A debtor is the person they think owes them money. A lawsuit is a method creditors can use to get a court to issue an “order” or judgment that states money is owed to the creditor by the debtor and specify the exact amount. A judgment offers the ability for the creditor to collect the debt through whatever means are available according to state law. California state law allows creditors to collect by means of wage garnishment, seized funds from financial accounts, and/or liens against property or assets.
That means it is best to file a bankruptcy case (if you are going to file on) before a judgment is entered on a lawsuit.
If you are in receipt of a notification of a lawsuit filed by a creditor or debt collection agency, but you have very little assets and no job, there may be no need to rush to respond, as there is very little a judgment could do to cause you immediate problems. If you own real estate or have a job and the creditor pursues legal means of obtaining payment on the debt through wage garnishment, a bank account levy or a lien against any real estate holdings, you could feel the pinch left by creditors seeking payment fairly quickly. If this is the case, you may want to consider responding to the lawsuit (or filing an answer to the lawsuit) in order to buy time to prepare your bankruptcy case and file.
Of course, the best strategy for responding to a notification that a creditor is suing you for nonpayment of a debt is to consult with a qualified bankruptcy attorney in your area and figure out if bankruptcy is a valid option. If you need assistance, please get in touch as soon as possible with one of the experienced southern California bankruptcy attorneys at Westgate Law.