Portland Bankruptcy Attorney

Bankruptcy Lawyer Portland Or

Portland Bankruptcy Attorney
CALL 503-380-7822
email-iconmap-marker
  • Home
  • Bankruptcy
    • Personal Bankruptcy
    • Business Bankruptcy
    • Zero Down Bankruptcy
    • Foreclosure
    • Chapter 7 Bankruptcy
    • Chapter 13 Bankruptcy
  • Estate Planning
  • About
  • Contact

Chapter 7 Can . . . Help You Avoid or Escape a Business Lawsuit

August 8, 2016 by Chris Kane

You can prevent a threatened lawsuit against you or your business, or resolve an ongoing one, by filing bankruptcy.

 

Business Disputes and Litigation

A business, especially one on shaky ground already, can be brought to its knees by a lawsuit, or the threat of a lawsuit, against the business or business owner.

Business disputes leading to litigation can take every possible form. Examples include simple collection actions by creditors, contractual disputes with a major customer, enforcement action by a governmental regulator, and fights with the business’ co-owners or investors.

Filing bankruptcy can become necessary when either the opposing party wins a judgment against the business and/or the owner, or the business runs out of money to pay the attorney fees and other costs of litigation. If the business is already hurting financially, the judgment can push it over the edge. Or the financial and emotional costs of the lawsuit, or sometimes even just the threat of a serious lawsuit, can be enough to persuade the business owner to throw in the towel and close down the business.

So what’s the effect of filing bankruptcy on the business dispute and/or lawsuit?

Litigation Immediately Stopped by the “Automatic Stay”

The “automatic stay” is the federal law that stops virtually all collection actions by creditors or claimants against the person filing bankruptcy. The “automatic stay” legally stops creditors from taking any new collection action against you, and from continuing any action. So it prevents lawsuits from being filed or from continuing.

The “automatic stay” is, as the name indicates, automatic with the filing of the bankruptcy case. It is imposed simultaneously at the filing, without a judge needing to sign an order. The automatic stay requires your adversary to at least take a pause in his efforts against you. Those efforts can’t continue without a court order from the bankruptcy judge. Often the bankruptcy filing persuades your adversary to do nothing further against you, to not ask the judge for that permission to proceed.

Why Most Business Disputes End at Your Bankruptcy Filing

This immediate stop to any litigation usually ends up being permanent for one primary reason—your adversary is trying to get you or the business to pay something, but that alleged obligation will be discharged—legally written off permanently—in your Chapter 7 case.  There’s no point for your adversary to get a court to give it a judgment about an obligation you owe if that obligation is just going to get wiped away in bankruptcy.

Why Debt Discharge Is Not Often Disputed

Bankruptcy law does allow your creditors (including those with alleged claims of any kind) to try to object to the discharge of their debts or claims. But these formal objections are relatively rare, for two reasons:

1. They are difficult for a creditor to win and prevent the discharge of the obligation. The legal grounds for objections are relatively narrow, generally requiring intentional misrepresentation or fraud on your part. Most standard business debts and obligations can be discharged. Debts are assumed discharged in the law unless the creditor can prove to the bankruptcy court that those narrow fraud-related grounds are met. Instead of just proving the existence of a valid debt or claim, as in a conventional lawsuit, now the creditor has to provide convincing evidence that you engaged in certain specific bad behavior, such as fraud in incurring the debt, embezzlement, larceny, fraud as a fiduciary, or intentional and malicious injury to a person or property. These circumstances often don’t apply at all to your situation, and even if they might they are difficult to prove.

2. When you file bankruptcy, in the process you often provide the creditor with persuasive information that it is wasting its time and money to pursue you further. In your bankruptcy documents you present to the court and to your adversary information about your finances that usually show that you genuinely have nothing worth chasing. As a result most creditors accept that pursuing you further would be not be worthwhile.

Summary

If you are dealing with a business dispute or lawsuit while you are shutting down your business, filing a Chapter 7 “straight bankruptcy” case will:

  • immediately stop virtually all lawsuits against you and/or your business, either temporarily or permanently;
  • permanently stop most lawsuits by legally discharging (legally writing off) the debt or the disputed claim; and
  • provide strong practical disincentives for your adversary to keep pursuing you after your bankruptcy filing even when it may believe it has legal grounds to do so. 

 

Filed Under: Business Tagged With: business assets, business debts, business disputes, discharge, discharge of debts, lawsuits

Welcome to the Portland Bankruptcy Law Blog

I'd like to help you overcome your financial problems. One good way to start is to provide you with accurate and timely information about the bankruptcy laws. I do that here through informative blog posts, with a new one published here every week. I've been doing this for years so there is a wealth of information for you here.

But please be aware that since you are unique person you need a highly personalized solution to your challenges. That requires the analysis and advice of a conscientious and highly experienced attorney. That's really the only sensible way to get the benefit of the many powerful and effective remedies that the law provides.

So I hope the information provided here is helpful to you. Please contact me for guidance to a much better place:

503-380-7822

Recent Posts

  • No link found between bankruptcy and employment prospects
  • Creditor found in violation of automatic bankruptcy stay
  • What are the short- and long-term credit impacts of bankruptcy?
  • Bankruptcy Attorney Portland, Or | Bankruptcy Lawyer Oregon | Christopher J. Kane P.C.

Categories of Blog Posts

  • Portland Bankruptcy Attorney
  • Personal Bankruptcy
  • Business Bankruptcy
  • Stop Foreclosure
  • Chapter 7 Bankruptcy
  • Chapter 13 Bankruptcy
  • Zero Down Bankruptcy
  • Filing Bankruptcy in Oregon
  • Testimonials
  • FAQ
  • Blog

FREE CONSULTATION

GET A FREE CONFIDENTIAL CONSULTATION THIS MONTH.
*Please see below.

CONTACT

Christopher J. Kane, P.C.

Address: 2207 NE Broadway, Suite 100, Portland OR 97232

Phone: 503-380-7822

Email: chris@ckanelaw.com


We are a debt relief agency.

We proudly help people understand their options and, if appropriate, help them file for bankruptcy relief under the Bankruptcy Code.

DIRECTIONS

CONNECT

  • Email
  • Facebook
  • LinkedIn
  • Twitter
Avvo - Rate your Lawyer. Get Free Legal Advice.
Best Bankruptcy lawyers in Portland
Best Bankruptcy Lawyers in Portland

* Using this form, or email, for communicating with us does not establish an attorney-client relationship, until we do that in writing. So please do not send confidential or time-sensitive information through this form or by email. You affirm that you have read and understand this disclaimer.
CAUTION: This website is to provide visitors with basic information about our firm, and information about how to contact us. Every situation is different, and no information on this website is legal advice on any specific question. You should not act on any of the information without first conferring with an attorney licensed in your jurisdiction. No attorney-client relationship or privilege is formed by visiting this site or by unsolicited email. Therefore, initial emails should not contain any confidential information. We may already represent parties adverse to you and cannot advise or represent you until we check for conflicts. We are licensed only in Oregon and offer our services only to those doing business in Oregon, unless we are associated with local counsel in accordance with other states laws. The applicable laws may have changed after the information on this website was published. While effort is made to keep the information current, you should not presume that all information is up to date. You must confer with an attorney to be sure you have current information.
Copyright © 2021 · Christopher J. Kane Attorney at Law · 503-380-7822 · Designed by Artizon Digital