Appealing a civil suit - after filing bankruptcy

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Latest post 08-21-2010 12:55 AM by Taxagent. 5 replies.
  • 08-20-2010 11:00 AM

    Appealing a civil suit - after filing bankruptcy

    I have been successfully sued by a previous employer and owe approx 40k in attorneys fees and this includes the settlement amount. I will have to file for bankruptcy since this is something I cannot afford. However, my attorney believes there are important employment law issues in this case and would like me to appeal, I would like to appeal as well.

    My question is: Once I file bankruptcy and the original ruling is then discharged. When the appeal is completed, if I were to lose, would I then owe the "new" attorney fees from the appeal process and potentially have to file again if I couldn't afford these fees?

    Any help is greatly appreciated.

    Thanks!

  • 08-20-2010 11:29 AM In reply to

    • Kivi
      Consumer
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    • Joined on 01-01-2005
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    Re: Appealing a civil suit - after filing bankruptcy

    There are two main bankruptcy chapters, so the answer to your question is, it depends.

    A chapter 7 bankrutpcy is a snapshot of your finances at the time that you file. Debts and other legal liabilities that you incur after the BK filing are not considered.

    You can only file and qualify for a chapter 7 BK once every eight years. So, if you file now and get a BK discharge, you will not be able to immediately file another chapter 7 just because you lost your appeal and have a new bunch of attorney fees or another judgment to pay. You might be able to do a chapter 13 filing if it has been at least four years since your chapter 7. As a practical matter, if you get this judgment discharged in BK, I personally would not bother with the costs and uncertainties of an appeal.

    A chapter 13 filing is a repayment plan. You pay back some or all of your debts in a chapter 13 over a three to five year period. Generally, you need the permission of the court to incur new debt or make a significant outlay of cash for some purpose other than repayment of creditors. If you plan to appeal this judgment and you need to give an attorney a 10k retainer, you will need the permission of the BK court to do so. Whatever debts that you do not pay back in full are forgiven. For example, your chapter 13 plan might have you only paying back $20,000 of that $40,000 judgment against you.

    Needless to say, getting the permission of the BK court for a 10k retainer, might be problematic. The US attorney's office/trustee will argue that the 10k should go to your creditors, not chasing after the "fool's gold of a successful appeal".

    Before you say, I do not want a chapter 13, you need to understand that you must pass a means test for a chapter 7 filing and not everyone can do so. Moreover, if you do have a previous chapter 7 discharge that is less than 8 years old, then your only choice, in the event of further financial difficulties would be a chapter 13 filing or attempt to wait it out. 8 years, is a long time.

  • 08-20-2010 11:52 AM In reply to

    Re: Appealing a civil suit - after filing bankruptcy

    OK. Let me see if I have this straight.

    You propose to file bankruptcy, discharge a 40K+ debt (so you don't owe it any more), then spend thousands in lawyer fees to appeal something you no longer owe?

    How the heck does that make any sense?

    Except maybe to your attorney who will collect a barrel full of legal fees.

     

     

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  • 08-20-2010 2:09 PM In reply to

    Re: Appealing a civil suit - after filing bankruptcy

    LOL! AJ you crack me up! 

  • 08-20-2010 2:13 PM In reply to

    Re: Appealing a civil suit - after filing bankruptcy

    If you were successful in filing a chapter 7 and having the debt wiped out, and you incurred new lawyers fees, absolutely you would be 100% responsible for them.   Of course he wants you to appeal...cha ching in his pocket with zero guarantee of a successful appeal and you would also have to notify the bankruptcy trustee of this pending lawsuit and you may not even be able to keep any money if you were successful in the appeal, it would belong to your creditors.  And Kivi was right, you can't refile. Jeez.  

  • 08-21-2010 12:55 AM In reply to

    Re: Appealing a civil suit - after filing bankruptcy

    flowens:
    My question is: Once I file bankruptcy and the original ruling is then discharged. When the appeal is completed, if I were to lose, would I then owe the "new" attorney fees from the appeal process and potentially have to file again if I couldn't afford these fees?

    It shouldn't get that far. The employer won't want to spend money defending an appeal for a judgment that will simply be discharged in the bankruptcy. I'd expect that once you file the bankruptcy, the employer would seek a stay on the appeal pending the outcome of the bankruptcy. If the debt gets discharged and assuming the employer had no lien to attach non-exempt assets, the employer would ask for the appeal to be dismissed as the matter would be moot.

    However, to the extent you do incur legal fees post-petition, you will owe those and you won't be able to get them included in the discharge.

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