Does Bankruptcy Affect Other Legal Proceedings?

Tax Debt Problems

There are cases where financial concerns are just a portion of the legal troubles or issues a client is facing. In those cases, it is especially important to seek the guidance of legal counsel who can examine a client’s situation and determine how different legal proceedings will affect one another. Depending on the circumstances, being involved in another legal proceeding may have a significant effect on that client’s bankruptcy petition.

The following is a brief overview of how bankruptcy can affect other legal cases the petitioner may be dealing with from a bankruptcy lawyer from Pioletti Pioletti & Nichols.

Legal Cases Besides Bankruptcy

The following types of cases are common ones that a bankruptcy client may be involved in while also filing a bankruptcy petition.

  • Family law cases – It is important for clients who may be involved in a divorce or custody proceeding to understand that certain debts related to these types of cases cannot be included in their bankruptcy petition. Child support, alimony payments, and any other obligations that are ordered as part of a divorce or separation agreement are all considered non-dischargeable in bankruptcy.
  • Employment claim or lawsuit – If a client has a claim against his or her employer, it must be listed on their bankruptcy petition before they file. Otherwise, the client may be prevented from litigating their claim once the bankruptcy case is closed or may be forced to turn over the claim to the bankruptcy trustee, who may settle the case for less than it is worth.
  • Lawsuits involving lenders or contractors – A client who has filed an action (legally referred to as an affirmative claim) against a lender they hold the note for or as a contractor, must list the claim within their bankruptcy petition. Otherwise, they may be prevented from bringing the claim after the bankruptcy petition is filed, much like with an employment claim as described above.

There are many other cases where a pending or soon-to-be-filed bankruptcy petition may be affected, or may affect the client’s rights as to his or her other case. These scenarios are more common and present ordinary issues that bankruptcy lawyers are prepared to address. Issues such as these are important reminders that while the bankruptcy process may seem straightforward, in many cases, it is not. It takes an experienced professional to ensure the bankruptcy process runs smoothly and effectively in order to get a positive result for the petitioner.

Why You Should Hire a Bankruptcy Lawyer

Being involved in another legal proceeding is not the only reason that hiring a bankruptcy lawyer to handle your bankruptcy is beneficial to you. The bankruptcy process can quickly become overwhelming and confusing for those not familiar with it, no matter how simple you think your case may be.

If you are experiencing financial hardship and are considering bankruptcy for debt relief, schedule a consultation with an experienced bankruptcy lawyer and find out what your legal options may be.