Legal Question in Credit and Debt Law in California
If the attorney was sued by a non-attorney being a creditor and the settlement was reached, in which attorney agreed to pay the creditor certain amount of money, and the case was dismissed in lieu of that agreement, can the attorney then declare bankruptcy, provided he has grounds for it, without being questioned by the BAR? What about the law suit restored back? There is no judgment. The judge dismissed the suit since the parties settled.
3 Answers from Attorneys
Attorneys have as much right to use the bankruptcy process as anybody else. Too bad you didn't insist on a check before dismissing your lawsuit.
While attorneys are entitled to discharge their debts in bankruptcy as everyone else, there is always the question of fraud allegations that could be made, particularly against an attorney because of the superior knowledge of the law by the attorney. Someone can allege that the attorney committed fraud and that could result in an investigation by the California Bar. Similarly, a motion to reinstate a dismissed lawsuit on the grounds that the dismissal was obtained by fraud could be granted. It all depends on the facts, particularly whether the attorney ever represented the creditor. An attorney dealing with a creditor who is or was a client is extremely dangerous for the attorney because of the attorney-client relationship and a case of fraud, undue influence, etc. could be made against the attorney which would lead to discipline by the Bar.
The Bar protects attorneys' clients, not their creditors. Unless the situation suggests intentional fraud or other moral turpitude, the Bar will have zero interest in the matter. You cannot reinstate the suit. All you can do is file a claim in the bankruptcy and/or file a bankruptcy adversarial proceeding for breach of the settlement contract.