Helping 20 Million Americans a Year for 20 Years. FREE!
Find the Right Lawyer for Your Legal Issue!

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential

Call us today for a free consultation (855) 466-5776

What happens to my civil lawsuit when the defendant files for bankruptcy?

UPDATED: January 30, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident law decisions. Finding trusted and reliable legal advice should be easy. This doesn't influence our content. Our opinions are our own.

The defendant’s bankruptcy acts as an automatic stay of any civil lawsuit against him or her in every court or administrative agency. Ordinarily, the defendant’s attorney will file what is called a "Suggestion of Bankruptcy" that alerts the court and other parties to this fact.

As a plaintiff, your options are to (a) file a motion in the bankruptcy court requesting relief from the automatic stay in order to continue prosecuting your lawsuit in the original district court, (b) file a notice of removal to have the case transferred bankruptcy court, (c) file an adversary proceeding within the bankruptcy court, or (d) wait for the bankruptcy case to terminate and, if your claim hasn’t been discharged, continue the case in the original court. Item (d) is rarely the right course of action. Only an experienced bankruptcy attorney can advise you which would be the better course for your specific situation.

The most important thing to remember is to continue the pursuit of your claim in the proper forum—either the district court or bankruptcy court. Doing nothing actually makes your situation worse. Any claims or counterclaims that the defendant may have against you are not subject to the automatic stay. Therefore, you could end up having to pay a judgment on a counterclaim and not being able to recover at all on your original claim simply because you failed to participate in the bankruptcy or request relief from the automatic stay.

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential

Call us today for a free consultation (855) 466-5776