We are trying to file chapter 7 next month and I have a question. We sued a lawyer for unethical conduct (long story) but he settled out of court then filed bankruptcy protection because so many people was suing him. My attorney said we will get paid over a three year period. It's not much $30,000 with probably half of it going to my lawyer. I don't know when we will get any money (if we will) but do we have to report that we have a pending lawsuit?
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I believe you have to report that in the Statement of Financial Affairs if it was within the last 12 months of your filing date, the schedule with the question, any pending lawsuits, etc? You list the case number and the status, finished, pending, settled. -
You bet you have to report this. Not to do this could be abuse. You sure don't want that. 'HubIf I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.Comment
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We were asked at our 341 if we were expecting any payouts from a lawsuit, etc. You will need to report this."To go bravely forward is to invite a miracle."
"Worry is the darkroom where negatives are formed."Comment
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Yes, that money is an asset of your BK Estate because the event that gave rise to the claim occurred BEFORE you filed BK.
As with any asset in BK it is either...
1. Exempt
2. Non Exempt.
Typically, these types of judgments are non-exempt, but you would have to review your state's exemption scheme.
So, if you ever actually get money, it will go to the trustee (unless the trustee decides not to bother with it, which is unlikely since the judgment has already been issued and the only think left to do is collect).Comment
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