Working through the U.S. legal system is often a complex process, and no matter what type of case you’re handling, it’s likely that details will vary greatly from other similar cases. For example, if you’re working through a state court case that involves litigation and one of the parties in the case files for bankruptcy relief, certain aspects of the litigation may be moved to bankruptcy court.
When this sort of thing happens, it’s essential to have the expertise of a bankruptcy attorney on your side. Whether you’re involved in state court litigation or not, Behm Law Group, Ltd. attorneys can guide you through the process of filing for bankruptcy relief in Jackson, MN.
Filing for bankruptcy is a nuanced process, and moving civil litigation from state court to bankruptcy court can make the bankruptcy process even more complicated. There are several types of litigation that may result in the removal of a case from state court to bankruptcy court. All litigation that involves the payment from one party to another will impact a bankruptcy case because the litigation may piecemeal or dilute resources that would otherwise have been used to repay creditors in a bankruptcy. For example:
Fraud: A common example of a fraud litigation that may be moved to bankruptcy court is when a creditor files suit against a debtor and claims the debtor misrepresented one’s financial standing in a repayment contract. The bankruptcy court needs to determine if the debt would be discharged in a bankruptcy outside of the litigation case. If the bankruptcy court determines that fraud has been committed, the bankruptcy court could decide that the debt is not dischargeable which could change the value paid to all creditors in the bankruptcy estate.
Personal injury: In personal injury litigation, the offender may need to make monetary restitution to the victim or the victim’s family. If the offender also files for bankruptcy relief, the money that could be used to pay the victim in the personal injury litigation could be used to pay other creditors as well through the debtor’s bankruptcy estate. This means there could be less money to repay the personal injury creditor.
Business: The movement of business litigation to bankruptcy court occurs most commonly when shareholders of a company file a lawsuit against that company for negligently or intentionally causing their stock to lose value due to ineffective or incompetent business decisions or outright corruption. If the company then files for bankruptcy relief, the shareholders will likely request that the litigation case be moved to the bankruptcy court to save money. If the case is handled in bankruptcy court, the process would likely be less costly for the parties.
The results of moving litigation from state court to bankruptcy court can be highly varied depending on the circumstances and timeline of any particular case. If you are considering filing for bankruptcy in Jackson, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com to learn more about the process.
