Being sued while bankrupt

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Being sued while bankrupt
« on: March 03, 2015, 05:36:52 PM »
Dear Friends I looked around but nobody seems to have this issue like mine and I need advice.

I have a unique situation. I'm in debt $90,000. $40 taxes and $50 credit cards and have a net worth of practically nothing. I rent and have almost no money in the bank.

I had a small business that failed, altough the business owes nothing, it was just a sole proprietorship but I am being sued by a sleaze bag personal injury lawyer. You know the ones that advertise on the back of buses to get you the most and don't pay until you get it. They sued me for $150,000 but the young woman behind the lawsuit is throwing around $45 as a private settlement. When I read the suit it was 100% BS but I have no money for a lawyer and when I read this lawyers other cases on canlii I found his specialty is bogus and weak claims, the ones where they claim a young woman needs $500/m in cleaning bills and then the case reveals they live at home and the cleaners they hired were their friends from college. I won't dwell on this as many of you in bankruptcy know the shaisters behind personal injury claims. It seems this lawyer tells you what to do and you fill in the blanks.

Nevertheless I'm faced with a problem.

Now that I received the statement of claim. Should I start bankruptcy now or wait until its over.
I already threw in the towel on the business since I have no money, barely work and low education. I was quite happy and well off as a small contractor but since the WSIB and HST came into effect it forced me underground and eventually bankrupt. Now I see no reason to do business in Ontario and I'm going to Regina in due time to live with my parents.

I would hate to go through bankruptcy to find out that after I'm discharged I lose in court and I'm faced with another debt to some deadbeat who stepped on a nail and I'm back to where I started.

Would it make sense to just skip for a year and wait until I have a final amount or can I include this lawsuit as part of the bankruptcy even tough it hasn't been decided yet ?  I'm sure I'm not the first one to be faced with this problem. I am just getting by now but debts increase every month. I'm making a couple of grand a month and living in a cheap apartment. At the end of the month I have practically nothing.

I am looking for some advice and possible a plan on how to proceed.  My biggest worry is that I go through bankruptcy and in 9 months I'm back to where I started.



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Re: Being sued while bankrupt
« Reply #1 on: March 03, 2015, 07:56:41 PM »
Once you file, the suit cannot proceed because of the stay of proceedings as per Section 69.3. I would be concerned about waiting because you don't want them to get a judgement against you.

Once you are bankrupt, a creditor can oppose your discharge. If the lawyer is really dogged about it, he can oppose and say to the court "We got a judgement against this guy and he went bankrupt just so that he doesn't have to pay us." If you file before a judgement happens, it might look better, but I don't have the background to be able to fully comment.  There are also mechanisms so that they can collect while you are bankrupt, but this is a possibly long and somewhat unusual process.

If you file for bankruptcy in Ontario, you will need to do your duties in Ontario, generally speaking. That means providing income and expense statements, going to counselling, and possibly a discharge hearing. If things get messy, you will (likely) want to be living in the same area in which you filed.

To answer your specific question: Yes, you can file now. You will have to provide some background and documentation to your trustee. In general, filing for bankruptcy will get rid of debts from lawsuits, but it's not a perfect solution if you're up against someone that is determined to go after you.



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Re: Being sued while bankrupt
« Reply #2 on: March 04, 2015, 01:20:18 PM »
Thank you for the reply. It is helpful information.

I am not looking to get off or manipulate the lawsuit by bankruptcy. Technically I'm bankrupt now. My debt is impossible to pay off since the interest is more than what I can pay down and the debt has been increasing the last year. I just want to avoid going through bankruptcy for nothing if I'm going to be back to the same spot a year or two later because given that I might as well just skip now and go back home with debt.

The few lawyers I spoke to over the phone say it's a junk lawsuit but they still want thousands to take it to trial.  I would love to explain the details of the claim for a laugh but I don't want to jeopardize anything. It is a textbook con by a young woman who doesn't even speak English and has nothing to lose as the lawyer works on a commission only if you win. They thought I had insurance as this is what these personal injury lawyers specialize in, extorting the ins companies. Once they learned I had no insurance they took a different tone. It has been one year since they served me and no trial yet. I don't know if the woman's claims fell in a hole because no doctor would agree with her except her own doctor from her country or if they just gave up because
the lawyer knows he's not going to get paid. These statement of claims are standard forms, they send the same thing to everyone, it was so bad the lawyer didn't even edit it and called me a "she" several times in the claim.

Thank you for this info. I will be looking in to what "stay of proceedings" means, which I assume is a legal term for a lawsuit that can not continue.  As far as I can tell I was in a good position to file  already but this will allow me to kill two birds with one stone.



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