I have seen this happen on a few occasions. If the lawsuit (or more specifically, your knowledge of a potential cause of action) arose before the filing of your Chapter 7 Bankruptcy, then it should have been disclosed as an asset (even if contingent at the time of filing). Your Trustee (who represents the Bankruptcy Estate for the benefit of your creditors) may wish to reopen your Bankruptcy for liquidation of this asset and (much more importantly) possible investigation for bankruptcy fraud if you knowingly withheld this claim with the intention of defrauding the Court or your creditors.
It sounds as though your former employer is attempting to have the civil case dismissed because you did not disclose your claim in your Bankruptcy (and, therefore did not believe it to be a valid claim yourself in the first place). At least such an argument could be raised.
I would suggest that you contact both attorneys (the one representing you in the civil case and your Bankruptcy attorney) and discuss this in greater detail immediately.
In some instances, the Bankruptcy Trustee may decide that the right to a pending lawsuit is not worth pursuing, so will abandon it and give it back to you. Unfortunately, the Trustee cannot make that decision unless you list the suit as an asset in your petition.
My suggestion is to file amendment to your schedules right away & see what the Trustee decides to do. Right now, you are in limbo.
Hope this perspective helps!
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