In Chicago, seeking some information on Bankruptcy. I lost my Job in January I have used my savings, 401K, to keep us a float for the last few month. Money is running out and I have not found a job. After careful consideration we are exploring filing bankruptcy chapter 7. We know we qualify for chapter 7 based on the debt we have, the question is I have not been able to get a job do to having a non-compete from my ex-employer. I am currently contesting the non-compete in court however if I lose my employer could come after me for their legal fees. On top of this I have a potential for a frivolous civil lawsuit from an employee for emotional distress.
We understand that there are debt is nondischargeable like student loan, taxes, etc. The question is if we filed BK chapter 7 could it protect us from my employer suing me for legal fees if I lost my case with my employer? Second question if the employee does file a lawsuit does chapter 7 offer any protection. If I file BK next month and the case with my employer and my employee take 6-12 month to finalize can they be added to the BK?
You have to disclose any claims, causes of actions, or causes of actions you may have that you have not filed. You also need to list all your assets and liabilities and so if someone is suing you or may sue you, you need to list that even if you do not know the amount, if they will sue or not.
You need to seek a consultation with a local bankruptcy attorney, almost all offer free consultations.
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The Chapter 7 case can discharge the potential claim of your ex employer for legal fees if the ex employer is the prevailing party in the action to invalidate the noncompete, but you would likely have to wait until the claim for legal fees arises (you have lost) before filing your Ch 7 case. Otherwise, it can be construed as having arisen post-filing which would be a non-dischargeable claim.
As for the employee, such an action is dischargeable unless the employee obtains a ruling from the bankruptcy court that your actions were, for example, willful and malicious. This is one way to exclude a debt from a bankruptcy discharge. There are some others as well. If the employee seeks such a ruling via an adversary proceeding, the issue would have to be litigated before the bankruptcy court.
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