Navigating Lawsuits in Yakima Bankruptcy Cases

Just the mere thought of a lawsuit can be pretty daunting, especially if you currently find yourself in financial hardship. For those in Yakima, Washington, understanding the intersection of lawsuits and bankruptcy is important.

Our experienced and knowledgeable bankruptcy attorneys have all the information you need when it comes to lawsuits, the relevant state and federal laws, and all the options available to you to protect your assets and secure your financial future so you can get back to enjoying everything Yakima County has to offer.

When it’s in the context of bankruptcy, a lawsuit is usually when a creditor chooses to pursue legal action to recover a debt you owe. This can lead to judgments, wage garnishments, and even asset seizures or repossessions. However, bankruptcy may be a path you can take to stop these actions and find your footing to regain financial stability.

Bankruptcy in the US is governed primarily by the US Bankruptcy Code (Title 11 of the US Code).

Creditors can sue to recover unpaid debts like credit card balances, medical bills, or personal loans. Filing for bankruptcy would invoke an automatic stay (11 U.S.C. § 362) and halt these lawsuits immediately.

If you are facing a foreclosure or eviction, bankruptcy can provide temporary relief or a means to begin negotiations with your creditors.

While there are certain tax obligations bankruptcy won’t discharge, it can still temporarily stop the collection actions being taken against you. Before filing, you need to understand the differences between dischargeable debts and non-dischargeable debts under federal law.

Debt that was incurred through fraudulent means is generally non-dischargeable in bankruptcy. If you are involved in this kind of lawsuit, the outcome can greatly affect your bankruptcy case.

While federal laws primarily govern bankruptcy, Washington state also plays a role.

• Discharge of Debts (11 U.S.C. § 524): This federal law releases you from personal liability for certain debts, which effectively ends the lawsuits related to those debts.
• Exceptions to Discharge (11 U.S.C. § 523): This federal law details all the debt types that can’t be discharged in bankruptcy, like child support, certain taxes, and student loans in most cases.
• Exemption Statutes (RCW 6.15): This Washington state law defines the property you can protect during bankruptcy proceedings, including a homestead exemption of up to $125,000.

Time plays a big role in any bankruptcy-related lawsuit, and strict guidelines are at the forefront of actions taken by creditors, trustees, and yourself. These deadlines are often influenced by federal bankruptcy laws and Washington state statutes and are meant to keep the process moving along more efficiently.

These are lawsuits filed within the bankruptcy case, often initiated by creditors, trustees, or the debtor themselves to resolve specific disputes there may be. Generally, adversary complaints must be filed within 60 days after the first date set for the 341 Meeting, as per Federal Rules of Bankruptcy Procedure Rule 4007(c). This applies to actions such as determining if the debts are dischargeable.

A trustee may sue to recover assets that were transferred improperly before filing bankruptcy. They typically have two years from the date of the bankruptcy filing to initiate these actions under 11 U.S.C. § 546(a).

Creditors or the trustee can file objections to your discharge. However, any objections must be filed within 60 days of the 341 Meeting, per Federal Rules of Bankruptcy Procedure Rule 4004(a).

Creditors have to file lawsuits within the set time limits to collect debts. This is the case even if bankruptcy isn’t involved. Here is the statute of limitations for lawsuits in Yakima, Washington:

• Written Contracts (RCW 4.16.040): 6 years
• Oral Contracts (RCW 4.16.080): 3 years
• Judgments (RCW 6.17.020): 10 years, but the creditors can renew for an additional 10 years

Most bankruptcy-related lawsuits follow standard rules, but certain exceptions exist that can also impact the process, like the tolling of the statute of limitations. As you know, filing for bankruptcy may pause (or toll) the statute of limitations for certain lawsuits during the automatic stay. However, once the stay is lifted, creditors can continue their legal actions if the debt isn’t discharged.

If lawsuits are filed after the statute of limitations expires, you or your Yakima County attorney can use the statute of limitations as a defense to have the case dismissed. Bankruptcy often overrides an ongoing lawsuit, but your creditors can file within specified federal deadlines to protect their claims.

In Yakima, bankruptcy cases are filed in the United States Bankruptcy Court for the Eastern District of Washington. The process typically starts with determining which bankruptcy type is suitable for your situation.

This is also known as liquidation bankruptcy, which allows for the discharge of most of your unsecured debts, including those that are involved in lawsuits. However, you may still have to sell non-exempt assets.

Chapter 13 bankruptcy or reorganization bankruptcy allows you to repay your debts over time, typically within three to five years. This bankruptcy type can stop lawsuits and provide you with a structured repayment plan.

When financial stress is already mounting and becoming a burden, a lawsuit can start feeling overwhelming. However, taking proactive steps can help you get through the complicated legal process and protect your rights:

You should never ignore a lawsuit. If you do, it can lead to default judgments. So, make sure to respond promptly to any court documents you receive.

An experienced attorney in Yakima can evaluate your case, help you determine the best bankruptcy chapter, and guide you through the process from start to finish.

Prepare detailed records of your income, expenses, assets, and debts. These documents are important when filing for bankruptcy, as they will help you address the lawsuits more effectively.

Once you file, the automatic stay goes into effect and will stop most lawsuits, so notify your creditors and the court of your bankruptcy filing right away. However, certain lawsuits may continue despite bankruptcy due to exceptions to the automatic stay.

These include criminal proceedings, child support or alimony actions, and certain tax audits and assessments. If you are involved in any of these situations, consult with your Yakima bankruptcy attorney to understand the options available to you.

Bankruptcy often requires that you attend a 341 Meeting of Creditors. This is where your creditors can ask questions about your financial situation.

Still not sure about things? We have answers to some of the more commonly asked questions people have as they navigate this sometimes complicated legal terrain.

Bankruptcy can discharge certain types of judgments as we already outlined, like those related to unsecured debts. However, judgments for debts like fraud, intentional injury, or DUI-related damages are typically considered non-dischargeable.

Bankruptcy can help remove certain judgment liens on property through lien avoidance under U.S.C. § 522(f), provided the lien impairs your exemptions.

If you are the plaintiff in a lawsuit, filing bankruptcy might transfer control of the case to the bankruptcy trustee. The trustee then decides whether to continue with the case, settle, or abandon the case altogether. It all comes down to how it could potentially benefit your creditors.

Debts from lawsuits due to negligence, like medical malpractice, may be dischargeable in bankruptcy. However, debts from intentional acts that may have caused injury are not.

Yes, filing for bankruptcy will affect your credit score. However, bankruptcy can also help prevent further damage by resolving judgments and stopping lawsuits that might potentially lead to more collection actions against you.

Ready for some help with your lawsuit? Bankruptcy and lawsuits can be complex, and you will quickly find that professional guidance will prove invaluable when it comes to making more informed decisions. Our Yakima bankruptcy attorneys have expertise in federal and state bankruptcy laws and can ensure compliance while maximizing exemptions and avoiding costly mistakes.

You may also find that some of your creditors will use aggressive tactics to collect the debt, including lawsuits, wage garnishments, and constant phone calls. This is where our Yakima bankruptcy attorneys come in. They can help file your case, implement the automatic stay, and provide you with relief from these actions.