If You Get Sued – Bankruptcy Can Help
People often come into my office asking about bankruptcy because they have been sued.
It is stressful and emotional to have a process server show up at your door and hand you papers letting you know you have been sued.
You start to imagine the worst and expect the creditor to take everything you have.
In California you have 30 days to respond. If you do not file an answer within those 30 days the creditor (company suing you) will ask for and receive a default judgment. That means the creditor does not need to prove you owe the money they are asking for. They don’t need to prove that the amount requested is correct and whatever they submit to the court will be accepted as true. They will then have a judgment that is valid for 7 years and can be renewed every 7 years after that.
You need to see an attorney right away so they can evaluate the lawsuit
People often ignore the summons and the 30-day warning. It is human to freeze under stress because you think there is nothing you can do. You may believe that you owe the money due to a deficiency after foreclosure on a house, or a credit card bill that ran up, or medical bills that you were unable to pay. However, there are often mistakes made by creditors with accounting and recording keeping so don’t feel bad making them prove up the claims.
It can also be confusing because there are other dates on the papers attached to the summons that refer to motions, status conferences and the like. You may end up with a default judgment that occurs before the status conference date. When that happens none of those later dates will matter. If a default judgment is taken it ends the active case and the creditor will proceed to attempt to collect the judgment.
Collecting the judgement means they can levy your bank accounts and garnish your wages
This is often when people stop ignoring the paperwork. Bankruptcy will not only stop the pending law suit, but if judgment has already been entered against you it will stop collection efforts on that judgment. When you file for bankruptcy the bankruptcy court will immediately enter an order for an Automatic Stay. This stay order stops any collection efforts from proceeding against you, including any pending lawsuits and collection of judgments.
The Superior Court and the creditors are notified that you have filed for the protection of the Bankruptcy Court and no action should be taken against you once they have received the notice. Filing bankruptcy provides immediate relief because the lawsuit will not proceed, you will not incur court costs or attorney’s fees to defend that lawsuit, and your creditors will not be able to collect on judgment and go after any of your assets or income.
Filing bankruptcy will stop any type of garnishment or execution on your property
If judgment has already been entered the creditor can garnish wages and bank accounts, and take non-exempt property. At the completion of the bankruptcy, entry of the bankruptcy discharge and final decree will void the judgment that was entered against you and eliminate the underlying debt.
If you have been sued or are expecting to be, call a knowledgeable bankruptcy attorney in your area immediately. You can get help and relief from the situation through the protection of the Bankruptcy Courts.
Contact Us today, using the contact form on the right or
call 415-504-2006 and schedule an appointment today.