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What Happens in Bankruptcy if I Have a Potential Lawsuit for Money?

1 minute read Upsolve is a nonprofit that helps you get out of debt with education and free debt relief tools, like our bankruptcy filing tool. Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card.  Explore our free tool

In a Nutshell

This depends: Are you being sued or are you the one suing someone else? If you file bankruptcy a lawsuit against you is stopped. If it's your lawsuit, your trustee will decide what happens.

Written by Jonathan Petts
Updated April 19, 2022

If you file bankruptcy and you're in a lawsuit that's pending, you may be wondering what happens. The answer depends on whether you're suing someone or someone is suing you.

If someone is suing you for money, there's a good chance that the lawsuit will be delayed or even dismissed once you file bankruptcy. After all, once your debts are wiped clean by your bankruptcy, you'll no longer owe most lenders anything. No debt means no lawsuit. Make sure that you tell the judge and, if possible, the other party's attorney once you file bankruptcy so that the case is handled appropriately.   

If you're suing someone else for money, any money that person is required to pay you (called damages) can be seized by the bankruptcy trustee if no exemption is available to protect it. The trustee essentially steps in your shoes with respect to the lawsuit. It's important to list any and all lawsuits you file against others on your bankruptcy forms, as you may forfeit the right to proceed with the lawsuit if you don't.

Written By:

Jonathan Petts


Jonathan Petts has over 10 years of experience in bankruptcy and is co-founder and CEO of Upsolve. Attorney Petts has an LLM in Bankruptcy from St. John's University, clerked for two federal bankruptcy judges, and worked at two top New York City law firms specializing in bankrupt... read more about Jonathan Petts

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