Can I File Bankruptcy if I Am Being Sued for an Accident?

Being Sued

If you have been involved in an accident with another person, that person may try to hold you liable for injuries that he sustained as a result of the accident. The other party to the accident may attempt to hold you liable for injuries by filing a lawsuit against you. In filing the lawsuit, the other party will attempt to show that you caused the injuries and the damages he suffered as a result. He would hope that the court would award him damages, which would likely be a monetary judgment. In order to set this process in motion, the other party to the accident must first file the lawsuit.

A lawsuit being filed against you will not prevent you from filing for bankruptcy. You may seek debt relief from a bankruptcy court at any time. To begin the bankruptcy process, you must file a bankruptcy petition. As an individual debtor, you may file for Chapter 7 or Chapter 13 bankruptcy. An automatic stay will go into place as soon as you file your bankruptcy petition.

The automatic stay prevents your creditors from continuing collection actions against you. Along with your bankruptcy petition, you must provide a creditor matrix to the bankruptcy court. The bankruptcy court will use the creditor matrix to contact each of your creditors to inform them that you have filed for bankruptcy and that they cannot collect debts from you while your case is in process. The other party to the accident must stop pursuing his lawsuit once the automatic stay has gone into effect.

If the automatic stay stops the lawsuit, then the civil court will likely render a judgment on the lawsuit after your bankruptcy case ends. If the judgment comes down after your bankruptcy discharge, you cannot discharge this debt through your bankruptcy case. If you cannot afford to pay a judgment, it would be more practical for you to file for bankruptcy after the civil court enters a judgment rather than while you are being sued. In that instance, you will have a better chance of discharging the debt. However, the bankruptcy court will not discharge a debt incurred for the willful or malicious injury of another person or another person’s property. The bankruptcy court will also not discharge a debt incurred for a death or personal injury caused by a debtor’s illegally operating a vehicle under the influence of alcohol or drugs.