Lawsuits
There are many types of lawsuits and the impact can be slight or severe on a debtor’s financial situation.
Creditors must issue a statement of claim, one of the first steps in a lawsuit, in order to collect funds by garnishment or court orders. This is what collection agencies mean when they say the next step is “legal”. See our website at www.hoyes.com to find out more information about this process.
Another type of lawsuit is when someone has been sued for car accidents, or injuries or loss of income or something similiar to that. These lawsuits also have to be considered in a bankruptcy or proposal situation and the trustee has to ensure that if a lawsuit is ongoing that the debtor understands the impact of doing the consumer proposal or personal bankruptcy.
If the lawsuit is settled and the judgement is rendered prior to the date of insolvency, then the trustee should be able to tell you if the debt is dischargeable or whether you would have to pay it when the bankruptcy or proposal is completed. If the lawsuit is ongoing, the usual course is for the applicant to get leave of the Bankruptcy Court to continue the action in order to come up with definitive numbers so a claim can be filed in the bankruptcy. Sometimes insurance companies are involved and they also require final numbers in order to write off the claim or settle it.
This is why it is important for the trustee to review the lawsuit documents to discuss all these factors with the debtor. The more information available, the better informed a decision can be as to whether The Bankruptcy and Insolvency Act can be used.
There can be many more issues surrounding lawsuits, so if you find you may be facing one that will put you into a financial crisis, call our offices at 310-PLAN or 519-435-1500 locally in London to set up an appointment to discuss the situation. Lawsuits just don’t happen in the BIG cities!!
