Legal Question in Bankruptcy in California

Bankrupting Civil Judgement
As part of a payment agreement in the sale of a business I signed a non compete clause saying that I would not go back into the Mortgage Brokerage business. Well I squandered the money and times got tough, so I started a smll brokerage and the new owners found out that I was in business again. I was served with a lawsuit and am now in danger of a judgement against me for over $500,000. Is this judgement dischargable? When is it advisable to file for chapter 7? Same day, a week, a month, longer? Thanks for the help. You may be hearing from me soon.

Glen

Asked on 7/21/06, 5:06 am

2 Answers from Attorneys

Robert F. Cohen Law Office of Robert F. Cohen

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Re: Bankrupting Civil Judgement

I hope you have an attorney representing you in that lawsuit. Depending on the nature of the judgment, the debt might (or might not) be dischargeable. For instance, if the new owners get a judgment based upon fraud, it might not be dischargeable. Also, a noncompete clause might be unconscionable in California because it might violate public policy against restraint of pursuing one's profession.

In the abstract, it is a hard call as to when to file BK. Obviously, you would incur expenses and attorney's fees related to trial. If you haven't paid your lawyer, it would be unfair to have the lawyer bear those unpaid expenses and include the attorney in the BK. On the other hand, the attorney might be doing a bang-up job for you and you'd win. Then it would be a shame to file a BK needlessly. There's no right answer.

Answered on 7/21/06, 6:45 am

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