If I just received a note in the mail that I’ve been sued over a car accident I had last summer in which I was not insured, is filing bankruptcy a viable option?

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If I just received a note in the mail that I’ve been sued over a car accident I had last summer in which I was not insured, is filing bankruptcy a viable option?

It’s for the sum of $7000. I just turned 21 and I’m living paycheck by paycheck and am making monthly payments on a lot of debts. I can’t possibly pay this anytime soon or even make any sort of sizable monthly payment on it. I’ve also been considering going into bankruptcy. What is my next step after receiving this notice What can they do to me if I don’t have the money to pay?

Asked on April 21, 2015 under Bankruptcy Law, Indiana

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

You were not properly served with the lawsuit if you just received a note in the mail.  You should have been served with the summons and complaint by a process server.  The summons states that you have been sued, identifies the parties and the court and the amount of time you have to file an answer to the complaint.  The complaint is the lawsuit.  If you are properly served and don't file a timely answer with the court and send a copy to the opposing party's attorney or the opposing party if no attorney, the plaintiff (party who filed the lawsuit) wins by default and files a default judgment against you.

Although you are planning on filing bankruptcy, you might want to pursue litigation to delay the end result of the plaintiff obtaining a judgment against you.  Until there is a judgment against you, the plaintiff won't be able to obtain any funds from you.  

Whether or not you pursue litigation, file bankruptcy when there is a court judgment against you.  You should file Chapter 7 bankruptcy which is straight liquidation that eliminates certain types of debts such as the judgment against you in the auto accident lawsuit.

If you don't file bankruptcy, the plaintiff can enforce the judgment with a wage garnishment.

Filing bankruptcy will prevent the plaintiff from obtaining a wage garnishment.


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