Filing Bankruptcy What Happens to Lawsuits
What is a Lawsuit
When you get behind on your bills, medical bills, credit cards, other loans, etc, first comes the collection letters and phone calls, then the civil lawsuits. A civil lawsuit is a court action which seeks a judgment for damages – the past due balance- interest, attorney fees, court costs, etc. A sheriff’s deputy knocks on your door or shows up at you job and serves you with a civil warrant or civil summons. Now you have to go to court, and face garnishment or levy of your bank account after a judgment is entered by the court, which will usually happen. How do you stop this endless cycle?
Does bankruptcy stop a civil lawsuit and the collection process?
[important]With rare exceptions, Chapter 7 or Chapter 13 Bankruptcy will stop the lawsuit in its tracks, prevent the entry of a judgment and will stop garnishments or bank levies.[/important]
A civil lawsuit
File Bankruptcy Before Entry of a Judgment
While it is true the bankruptcy will halt the collection process, including judicial proceedings, it is best to file for bankruptcy prior to the entry of a judgment, especially if you own real property. In Tennessee, a judgment creditor may file a certified copy of a civil court judgment in the Office of the Register of Deeds, and a perfected secured lien is created upon any real property that the debtor owns. Once a perfected security lien is created then it usually can not be discharged in bankruptcy, without surrendering the secured asset- your real property.
If you have been served with civil process
served with civil process