The Contract Case and the "Unsuspecting" Bankruptcy Issue

Oftentimes, litigants - whether pro se or represented by counsel - have no idea about the "unsuspecting" bankruptcy issue that may completely derail their case.

It is common place for individuals to file bankruptcy where they have become overwhelmed with debt. Sometimes, the bankruptcy is filed because an individual is getting sued for some money damages for breaking a contract, personal injury law suit etc.

As a litigant in any matter where an unrelated and unsuspecting bankruptcy has been filed, what are you obligations. First, if you are the debtor who has filed the bankruptcy, you want to ensure that you provide notice to all of your creditors including the opposing party in the current case. Second, be sure to inform the judge of the filing and place the matter on a "bankruptcy stay" calendar until the Bankruptcy court provides guidance on whether the matter should continue or be discharged through the bankruptcy.

If the debtor's bankruptcy discharges the current litigation, as the opposing party, you are not allowed to continue suit after the debt if the case had been filed and successfully discharged. Now, if you are unsure as to how this litigation should be treated in a bankruptcy, as the opposing party, it is your obligation to file an Adversary complaint in Federal court under the debtor's bankruptcy case to ask the Federal Court for clarification and to state a claim as to why your litigation should not be discharged. If you fail to do that within the Court's requisite time frame, you may be deemed "out of luck" and be bound by bankruptcy discharged principles. Note, any adversary complaints should be filed during the life of the bankruptcy, not after.

As the opposing party to the debtor's bankruptcy, if you do continue to litigate a matter against the debtor after that debtor has received a discharge against your contract matter, you may be liable for sanctions if the debtor chooses to file this motion in Bankruptcy Court. In addition, you could be liable for punitive damages especially if you had notice of the bankruptcy filing.

As a pro se litigant, it is impossible to know this and that's why it's very important to have counsel representing you. Many issues can come up to halt your current matter and you need someone who is well versed in many practical areas to ensure the best outcome for you. Be aware of the "unsuspecting bankruptcy issue" and stay clear of any violations of a federal court order discharging a current litigation against your adversary.

If you are currently involved with an ongoing civil matter and have bankruptcy issues that have surfaced, call SL DeBarros Law Firm, LLC to provide justice for you.

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