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Max Lowry
Max Lowry, Advocate
Category: Bankruptcy Law
Satisfied Customers: 1457
Experience:  LLB, 10 years post qualification experience
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I am already bankrupt due to losing a personal litigation.

Resolved Question:

Hi,
I am already bankrupt due to losing a personal litigation.
During the period of my bankruptcy, is it possible for a new personal litigation to be started against me or am I protected against this until my bankruptcy is discharged?
Thanks
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  Max Lowry replied 2 years ago.
Hi, welcome to the site. My name is ***** ***** I will help you with your question. In short it is possible for new personal litigation to be started against you during the period of bankruptcy. Any costs made against you prior to bankruptcy fell into your existing bankruptcy. Any costs/damages awarded against you post bankruptcy you will be liable for. The current bankruptcy will not offer you any protection against someone starting litigation against you before discharge.
Please let me know if you wish me to clarify anything.
Customer: replied 2 years ago.

Hi Max,

Thanks for your answer, I have been doing some research myself and have came across this information in the Insolvency Act ..

"After the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall—before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose."

A petition has already been filed against me in Court. I am wondering exactly what "leave of the court" means. By accepting the petition, has "leave of the court" already been granted? Or could I ask the court to consider not accepting the petition against me due to my bankruptcy?

Thanks

Expert:  Max Lowry replied 2 years ago.
The section you've quoted deals with "provable debts". If the debt is provable in the bankruptcy then a creditor cannot start a new action against you (the words "provable debt" means the debt is already in existence before the bankruptcy order was made so it falls into the bankruptcy). A creditor cannot commence new litigation for a pre-existing debt. It's claims as creditor will fall in the original bankruptcy.
However, commencing new legal proceedings during bankruptcy is usually allowed. The court does have some discretion but the courts attitude is that if it's a new debt then a creditor would be entitled to pursue an individual for it. The discretion allows the individual to ask the court to either stay (stop) the proceedings or allow them to continue but only on certain grounds. You are therefore entitled to ask the court to not allow the new petition on the basis you are already bankrupt but there is no guarantee your request will be allowed.
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