Already Filed Bankruptcy Then Sued By a Creditor? Do This

Does Filing Bankruptcy Protect You Against Debt Collection Lawsuits?

Yes.

If you're considering filing a bankruptcy case, you've probably been struggling with your finances for some time. This means that some of your debts may have been charged off by the original creditor and sent to collections. Some creditors or collections agencies may even be suing you to try to collect the past-due debt. If so, you're probably wondering whether or not you need to respond to the creditor's lawsuit.

Your response will depend on when the court date is for the creditor's lawsuit and where you are in the process of filing your bankruptcy case. 

If You've Haven't Yet Filed Your Bankruptcy Case...

It can take some time to get all your documents together and fill out all the required forms to complete your bankruptcy petition. If you're still in the process of filing out your bankruptcy paperwork and you haven't filed your bankruptcy case before you get a debt collection court date, answer the summons and be sure to attend the hearing. If you don't respond to the lawsuit and show up for the hearing, the judge can grant a default judgment against you simply because you didn’t show up. 

Let the court and the creditor know in your response to the lawsuit that you're filing bankruptcy.

If You Filed Your Bankruptcy Case Close to Your Court Date...

If you filed your bankruptcy case just a few days before your court date, it’s best to attend the hearing so you can tell the court and the creditor that sued you that you've filed bankruptcy.

Better yet, call the court clerk’s office a day or so before your court date to tell them about your bankruptcy. They may tell you that you no longer have to show up. This process tends to be different from court to court, so it's best to check in either via phone or in person.

In either case, be sure to have your bankruptcy case number ready in case the clerk or judge asks for it.

If You're Facing a Debt Collection Lawsuit, Inform the Creditor's Lawyer of Your Bankruptcy

Once you file your bankruptcy case —whether it’s right before the court date or weeks before — you need to let the court and the opposing party know. Since banks and businesses can’t represent themselves in court, your best bet is to call their lawyer. You can find their information on the summons and complaint that informed you of the lawsuit.

For the court, a quick call to the clerk’s office to let them know so they can make a notation in your case docket should do the trick. The creditor that sued you is responsible for making sure that the lawsuit doesn’t continue, but it never hurts to loop the court and the court staff in early.

Bottom line: As soon as you have your bankruptcy case number, call the other side’s lawyer. Let them know that you just filed bankruptcy and what your case number is. This is usually enough to halt all proceedings. Creditors and their lawyers know that they can get in serious trouble if they continue with a lawsuit or other collection actions once an automatic stay is in effect.