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Irvine Bankruptcy Lawyer / Judgments & Lawsuits Bankruptcy

Getting sued is not something you budgeted for, and it’s costly. Legal fees are hefty, even if you win, and the costs are only compounded by a steep money judgment if you lose. Once a judgment is entered against you, the judgment creditor can put a lien on your property, garnish your wages, or use countless other legal tools at their disposal to collect that debt. You might have to take out a loan to pay off the judgment, or incur additional credit card debt by charging monthly living expenses, as all of your income and savings go toward paying the judgment.

There are numerous ways a lawsuit or judgment could put you in serious financial jeopardy, but there are also numerous ways a bankruptcy filing could help you out. With the powerful tools bankruptcy protection offers, The Law Office of Charles A. May can help you prevent lawsuits from being filed or pursued, or keep judgments from being collected. We understand how the nation’s bankruptcy laws are meant to protect people struggling with overwhelming debt to avoid financial ruin.

Judgments and lawsuits are some of the many kinds of debts that can be effectively dealt with in bankruptcy. Read on to find out how, and for help with judgments, lawsuits, and excessive debt in Orange County, Los Angeles, or elsewhere in Southern California, call The Law Office of Charles A. May for a free consultation with our knowledgeable and helpful lawyer.

Relief From Lawsuits and Judgments Starts With the Automatic Stay in Bankruptcy

The automatic stay goes into effect the moment you file your bankruptcy petition, and it halts any kind of activity from creditors and bill collectors seeking payment of a debt they say you owe. When you file for bankruptcy, the automatic stay prevents a lawsuit from being filed, it stops a live lawsuit from proceeding, and it halts further collection activities if a creditor has already won a judgment against you. The automatic stay gives you immediate relief, allowing you room to breathe while we work to discharge your debts and get you a fresh start.

It is important to know that a creditor can file a motion with the bankruptcy court to lift the automatic stay. If that motion is granted, the creditor could lawfully proceed with a lawsuit or activities to collect a judgment entered against you. Therefore, it is unwise to ignore a lawsuit filed against you even if you are planning to file for bankruptcy. This could lead to a default judgment entered against you, and it is much harder to deal with a judgment in bankruptcy than it is to deal with a pre-litigation debt, especially if the creditor has already obtained a lien or otherwise secured their judgment.

Lawsuits Dismissed, Judgments Discharged

While the automatic stay is in place and giving you some breathing room, we proceed with getting you more permanent relief by working to eliminate the lawsuits or judgments currently hanging over your head. If the subject of the lawsuit is a debt that is dischargeable in Chapter 7, filing bankruptcy could get the lawsuit dismissed or keep it from ever being filed. If a judgment was already obtained on an otherwise dischargeable debt, the judgment itself might get discharged in bankruptcy. Examples of lawsuits over dischargeable debts include lawsuits brought by hospitals or credit card companies to collect on an unpaid bill. Medical debt and credit card debt are both generally dischargeable in bankruptcy, so a judgment based on those debts could also potentially get discharged.

What About Money You Received in a Lawsuit?

If you are the plaintiff in a lawsuit and are also in the middle of a bankruptcy proceeding or about to file, you might wonder what would happen to any judgment you might win. Will the bankruptcy trustee take that money and use it to pay your creditors? Possibly. The timing of the lawsuit or judgment matters, which is where some careful planning before you file for bankruptcy can come in handy. The other consideration is whether the judgment you get might be exempt. The bankruptcy trustee can only liquidate your non-exempt property, and a skilled attorney will work through the California bankruptcy exemptions to exempt your property wherever applicable, including some judgments, so you can potentially obtain a discharge of debt without having to give up any assets.

California has two sets of bankruptcy exemptions available to Chapter 7 filers. You can not mix and match exemptions; you have to choose one or the other, but both sets offer exemptions for money obtained in a personal injury or wrongful death lawsuit.

Set number one includes an exemption for up to $29,275 of a personal injury judgment or a judgment for the wrongful death of a person the filer depended on, to the extent the money is reasonably necessary for the support of the debtor and his or her dependents. Set number one also includes a wild card exemption that exempts up to $30,825 in assets, which could include the proceeds of a lawsuit.

Set number two allows you to exempt the entire amount of a personal injury or wrongful death claim that has not yet been reduced to judgment and paid. If it has already been paid, you can still exempt the amount necessary for support.

At The Law Office of Charles A. May, we go through both sets of exemptions and pick the one most advantageous to you overall, with the goal being a “no-asset” bankruptcy where the bankruptcy trustee does not take any of your property.

Get Help Today With Lawsuits, Judgments & Other Burdensome Debt

The Law Office of Charles A. May offers friendly guidance to support you while we take on the task of obtaining a discharge of your debt in bankruptcy and helping you make a fresh start. For help with judgments, lawsuits, and other burdensome debt in Orange County, Los Angeles, and throughout Southern California, call our bankruptcy lawyer for a free consultation or immediate assistance to get started today.

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