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Someone has filed a lawsuit against me, or has taken a judgment against me. What can I do?


It depends on the nature of the lawsuit. Most civil suits are based on negligence or breach of contract. In those cases, bankruptcy can do a lot for you. In a Chapter 7, you can stop the lawsuit completely, or if someone has already taken a judgment against you, you can erase the judgment and any liens that have been placed on your property because of the judgment.

It’s a little more complicated in a Chapter 13, but most contract or negligence lawsuits can be stopped or cut short, at least temporarily. Sometimes the lawsuit will go forward anyway, and sometimes you can settle it faster because the suit is not worth as much any more. Any judgment that has already been taken against you is treated as a general unsecured debt, unless they have taken a lien on your house or other property. But even those liens can usually be wiped out in bankruptcy.

This does not apply to most divorce judgments, or to lawsuits based on fraud, criminal activity, or injuries resulting from accidents involving drugs or alcohol. There are some debts that can be discharged in a Chapter 13, but not in a Chapter 7.