Unless you have filed for bankruptcy within the past seven years, you can file for bankruptcy after you receive a summons for a debt. The important question is whether filing for bankruptcy will help you avoid liability for judgment on the debt. The answer to that question depends on whether you file for Chapter 7 or Chapter 13 bankruptcy and also depends on the type of debt.
A summons is the formal legal term for a notice and order to appear as a defendant in a lawsuit. A summons for a debt essentially notifies you that the creditor is attempting to obtain a judgment against you for the debt and orders you to appear in court to defend yourself or admit that the debt is valid. Unless you file for bankruptcy, the summons results in a lawsuit and trial.
Filing for bankruptcy has an immediate staying effect on the summons and lawsuit. Under federal bankruptcy law, filing a voluntary petition for bankruptcy--whether under Chapter 7 or 13--automatically stays any pending lawsuits or other debt collection activities against you. This means the creditor cannot move forward with the lawsuit that is the subject of the summons. The automatic stay remains in effect for the duration of your bankruptcy case.
If you file for Chapter 13 bankruptcy, you will have to prepare and present to the bankruptcy judge a debt adjustment and repayment plan. The court will review the plan and either approve or deny the plan. Most likely, your repayment plan will include provisions for partial repayment of the debt that is the subject of the summons you received. If this is the case, the creditor will have no right to move forward in the lawsuit unless you violate the terms of your approved repayment plan. As long as you fully pay your repayment plan, any amount outstanding on the debt will be discharged, meaning you never have to repay it.
Chapter 7 bankruptcy has a more direct impact on debts than Chapter 13. Under Chapter 7, nearly all of your debts will be discharged without the requirement that you make payments under a repayment plan. The types of debt that survive a Chapter 7 discharge are tax debts, family support obligations and student loan debts. All other debts are discharged, which means the summons becomes ineffective because the creditor loses the legal right to enforce repayment of the debt.
- "The New Bankruptcy: Will It Work For You?"; Stephen Elias; 2009
- U.S. Courts. "Discharge in Bankruptcy - Bankruptcy Basics." Accessed May 20, 2020.
- Federal Student Aid. "In some cases, you can have your federal student loan discharged after declaring bankruptcy." Accessed May 20, 2020.
- IRS. "Additional Information on Payment Plans." Accessed May 20, 2020.
The Constitution Guru has worked as a writer and editor for "BYU Law Review" and "BYU Journal of Public Law." He is an experienced attorney with a law degree and a B.A. degree in history with an emphasis on U.S. Constitutional history, both earned at Brigham Young University.