Filing a bankruptcy just prior to the court date is ideal, because it will stop the lawsuit, and totally dismissed it. If you have an interst, I can help you get that done.
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I am delighted that as a first time viewer, attorney Digiulio, was first to respond to your question: both for the accuracy of her answer and the far greater esthetic quality that her photograph brings to the viewer as compared to my Grumpy-Old-Lawyer mien.
I suggest you take her up on offer to consult.
Once the bankruptcy is filed your attorney should file a plea of stay in the small claims court which stops the lawsuit moving forward. A copy of the plea of stay is sent to the attorney and they usually file a dismissal of the claim within a few weeks. No it does not automatically go away, your attorney should be taking further action.