Legal Question in Bankruptcy in Indiana

Once a creditor decides to sue, is it too late to file bankruptcy?

If a creditor decides to sue for an unpaid debt (we are a small biz owner -sole prop.), is it too late to file bankruptcy? We have been turned over to a collection agency for a large sum of money. If we cannot come to an agreement on payment arrangements and the collection agency tells the creditor that it would be best to get a judgement against us will we be able to file bankruptcy once we know about it or will it be too late by then? The debt was incurred by our DBA small business (sole proprietor). Can we dissolve the DBA (sole prop.) and turn it into an LLC or Corp and keep our assets safe? There was no written contract, credit application or anything like this for the materials sold on credit to our business. Plus the amount they say we owe is questionable. Our numbers do not come close to matching theirs. We are in Michigan, their biz is in Indiana.


Asked on 6/12/06, 9:39 pm

1 Answer from Attorneys
Charles Lawler Clark Hill PLC

Re: Once a creditor decides to sue, is it too late to file bankruptcy?

You can file bankruptcy at anytime. You may want to file prior to a judgment. Hire an attorney to negotiate a settlment. This may be a good time to look at your business plan and take steps to insure its survival. Additionally, any transfer of assets to another entity may be deemed to be fraudulent by the court system. This is something that should be handled head on and dealt with.

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Answered on 6/13/06, 8:26 am


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