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  1. #1
    Join Date
    Oct 2016
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    5

    Default Does Chapter 13 Stop Pending Small Claims Lawsuit

    My question involves bankruptcy in the state of: New Jersey

    A friend of mine recently filed a Chapter 13. Before he actually filed, he had a small claims case pending against him and he listed the Plaintiff as a creditor in his Chapter 13. The Small Claims Court date is this week. The Plaintiff in the small claims case has an attorney. My question is, what happens now with the small claims case? I am assuming that now that the Chapter 13 is filed, and there is a bankruptcy case number, and the Plaintiff was notified of the bankruptcy filing as a creditor, the automatic stay goes into effect and the case cannot be heard unless the Plaintiff obtains a lift of the automatic stay through the bankruptcy court. And, wouldn't it be a violation of the automatic stay if the Plaintiff's attorney tries to pursue the small claims case this week?

    Does my friend even need to appear in court on the small claims case?

    I, of course, told my friend to ask his bankruptcy attorney if he still needs to go to court on the small claims case, or what he should do regarding the case before the court date. But, I thought that I would also ask here for any thoughts or information.

    The small claims case is in New Jersey, and it is not an eviction case. It is a case where a former tenant (the Plaintiff) is suing my friend (the tenant's former landlord) alleging that the tenant-Plaintiff should have received more of his security deposit back.

  2. #2
    Join Date
    Mar 2013
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    18,340

    Default Re: Does Chapter 13 Stop Pending Small Claims Lawsuit

    Your friend would be wise to go to court on the hearing date, present a copy of his bankruptcy filing and a copy of whatever notice was sent to the plaintiff's attorney, and make an oral motion for dismissal.

    Otherwise, he risks a default judgment that he will have to address later.

    There's a good reason for the old saying "An ounce of prevention is worth a pound of cure."

    Sure, it's wrong to violate the automatic stay, but it's easier to prevent a mess than clean it up after wards.

  3. #3
    Join Date
    Oct 2014
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    8,238

    Default Re: Does Chapter 13 Stop Pending Small Claims Lawsuit

    Quote Quoting adjusterjack
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    Your friend would be wise to go to court on the hearing date, present a copy of his bankruptcy filing and a copy of whatever notice was sent to the plaintiff's attorney, and make an oral motion for dismissal.
    Not dismissal. It would be a motion to stay proceedings until the bankruptcy is over or the automatic stay is lifted. And he may be able to file that with the clerk prior to the hearing date.

  4. #4
    Join Date
    Oct 2016
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    5

    Default Re: Does Chapter 13 Stop Pending Small Claims Lawsuit

    Quote Quoting adjusterjack
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    Your friend would be wise to go to court on the hearing date, present a copy of his bankruptcy filing and a copy of whatever notice was sent to the plaintiff's attorney, and make an oral motion for dismissal.

    Otherwise, he risks a default judgment that he will have to address later.

    There's a good reason for the old saying "An ounce of prevention is worth a pound of cure."

    Sure, it's wrong to violate the automatic stay, but it's easier to prevent a mess than clean it up after wards.
    Thanks adjusterjack. Makes sense. I will suggest that to my friend. I think he will just show up with the documentation and just orally ask the court to postpone the case. He will probably not be good at presenting any kind of formal motion, but small claims court is fairly informal and I think if he shows up with the bankruptcy documentation the court will know what the right thing to do should be. I doubt that the court would let the case be heard that day given that he filed bankruptcy.

    Also, my friend is supposed to meet with his bankruptcy attorney before the small claims court date anyway. So, hopefully his BK attorney will either tell him what to do, or will give him the right letter or documentation to bring with him, or both.

    Quote Quoting Taxing Matters
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    Not dismissal. It would be a motion to stay proceedings until the bankruptcy is over or the automatic stay is lifted. And he may be able to file that with the clerk prior to the hearing date.
    Thanks. Good point. Also, my friend is supposed to meet with his bankruptcy attorney before the small claims court date anyway. So, hopefully his BK attorney will either tell him what to do, or will give him the right letter or documentation to bring with him to court, or both.

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