Can You Sue Someone Who Has Filed Chapter 13 Bankruptcy?
Discover your legal options if you have a legal claim against someone who has filed for Chapter 13 bankruptcy with the Law Offices of Wenarsky and Goldstein, LLC
Legal Action Against a Chapter 13 Debtor: Exploring the Possibilities
Chapter 13 bankruptcy allows debtors with steady earnings to repay all or part of their debts over three to five years following the terms of a court-approved repayment plan. This type of personal bankruptcy provides debtors with a way to catch up on missed payments and maintain ownership of their assets, like homes or cars, instead of liquidating them to repay their debts.
When a debtor files for Chapter 13 bankruptcy, the court imposes an automatic stay. This stay halts most creditors’ collection efforts, including lawsuits, wage garnishments, and asset seizures. Even though the automatic stay stops most lawsuits against debtors, its protection is not absolute, as there are circumstances where it is possible to file a valid lawsuit against a Chapter 13 debtor.
In matters where legal action is permissible, suing a Chapter 13 debtor is still a complex process that requires the experienced counsel of a bankruptcy attorney.
Our dedicated team at the Law Offices of Wenarsky and Goldstein, LLC can help you understand your rights and obligations whether you’re a debtor, creditor, or third party seeking legal relief against a bankruptcy debtor.
Below, we examine some of the circumstances when a lawsuit against a Chapter 13 debtor is possible to help you understand your position. We’d be glad to answer any questions you might have afterward.
How the Automatic Stay Works in Chapter 13 Bankruptcy
The automatic stay in bankruptcy is an automatic court order or injunction that immediately halts most collection activities by creditors once a bankruptcy petition is filed. This protection is designed to give the debtor breathing space to reorganize their finances without the pressure of ongoing debt collection efforts.
The stay may remain active throughout the Chapter 13 process as long as the debtor complies with the repayment plan. The court may also lift it if a creditor successfully petitions for relief from the stay.
The automatic stay stops most actions by creditors, including:
- Foreclosure
- Repossession
- Wage garnishment
- Lawsuits for debt collection
- Harassing phone calls and letters.
Certain legal actions, however, are not blocked by the automatic stay, meaning they can continue despite the bankruptcy proceedings. They include:
- Family law proceedings such as child custody
- Criminal proceedings
- Cases related to personal injury or wrongful death claims, particularly those involving driving under the influence (DUI).
These exceptions ensure that the bankruptcy proceedings do not hinder essential legal processes and public policy actions.
Legal Options for Individuals With Claims Against Chapter 13 Debtors
Creditors or other parties who wish to file a lawsuit against a Chapter 13 debtor can explore certain legal options that would allow them to take legal action regardless of the automatic stay. They include the following :
Seek Relief From the Automatic Stay
Creditors (especially secured creditors with a lien over the debtor’s assets) can file a motion with the bankruptcy court requesting permission to proceed with their lawsuit or collection action, such as foreclosure, despite the automatic stay.
Initiate Adversary Proceedings
An adversary proceeding is a separate civil lawsuit filed within the context of a bankruptcy case. These proceedings are used to address disputes or contests related to a pending bankruptcy case but require judicial intervention beyond the administrative resolution of creditor claims. Some of the issues that can be resolved via adversary proceedings include:
- Objections to debt discharge
- Debtor fraud
- Disputes over a creditor’s secured status.
Proceed With Exempt Legal Actions
If the lawsuit falls under one of the exceptions to the automatic stay (e.g., child custody, criminal proceedings), it can proceed despite the stay. Sometimes, it could be difficult to tell whether a lawsuit is exempt from the automatic stay. In such cases, the help of a bankruptcy lawyer is crucial to determine where the subject matter of the proposed lawsuit falls and the appropriate steps to take without violating any law.
Participate in the Bankruptcy Proceedings
Creditors (especially unsecured creditors) might need to file a claim and participate in the bankruptcy court proceedings to defend their interests and work to get the maximum debt repayment possible.
Selecting the appropriate option for one’s circumstances could be complicated. Legal guidance is essential to ensure you adopt the most effective strategy that is likely to yield the most benefits.
Conversely, if you’re a Chapter 13 Debtor who is faced with legal action from creditors and other third parties, strong legal representation is needed to protect your interests and ensure that your ability to pay off your debts and obtain debt relief is not jeopardized.
How the Law Offices of Wenarsky and Goldstein, LLC Can Help
At our law firm, we understand the complexities of the bankruptcy process and can provide guidance and support at every stage.
Our diverse clientele ranges from individuals to businesses seeking debt relief under Chapter 7 and Chapter 13 bankruptcy. Over the years, we have helped many clients secure favorable outcomes (debt discharges and confirmed repayment plans).
We offer compassionate, professional advice for individuals contemplating bankruptcy due to overwhelming debt. We can discuss the implications of Chapter 13 and how it might affect your financial future. Our goal is to guide you through the repayment plan process and set you on the path to comprehensive debt freedom.
Our firm also provides comprehensive support to creditors and individuals with claims against bankruptcy debtors, helping them understand their rights and options. Whether you seek relief from the automatic stay or you need to ensure that your claim is recognized in the bankruptcy proceedings, we are fully equipped to assist you and fight for your right to recover what you’re owed.
We care about your debt situation and are dedicated to offering quality and caring representation in these critical moments.
Speak With Our Bankruptcy Attorney Today
Suing someone who has filed bankruptcy can be complicated due to the protections they receive.
When a person files for Chapter 13, an automatic stay stops most lawsuits and collection efforts. However, creditors still have ways to pursue their claims. They can ask the court to lift the stay, file a proof of claim to get paid through the repayment plan or handle specific disputes through adversary proceedings. The stay doesn’t affect some actions, like child support cases and criminal charges.
While Chapter 13 helps debtors reorganize their finances, it also allows creditors to address their claims fairly. Legal help is often important for both parties to navigate these rules and protect their rights and interests.
We at the Law Offices of Wenarsky and Goldstein, LLC, have extensive experience navigating the intricacies of bankruptcy law. We can provide the quality legal counsel and representation you need to overcome the hurdles of the bankruptcy system and get the legal relief you seek. So do not hesitate. Contact us today for personalized legal strategies and solutions from an experienced bankruptcy attorney. Let us help steer you towards a positive outcome.
Call the Law Office of Wenarsky & Goldstein
At the Law Offices of Wenarsky & Goldstein, LLC, our New York and New Jersey attorneys are experienced and knowledgeable in bankruptcy, estate planning and probate, guardianship, special needs planning, and real estate law. To learn more about how we can assist you with your legal needs, call us today at 973-453-2838.
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