Different contributor here. Please permit me to assist. You asked:
1. If the Defendant files for bankruptcy before the affidavit can be issued by the Plaintiffs’ attorney, and judgment thus cannot be entered in the District Court in favor of the Plaintiff prior to the filing of Bankruptcy by the Defendant, would this action of the Defendant (filing bankruptcy) hinder the ability of the Plaintiff to still proceed to obtain the Judgment in the District Court as set out in the Settlement Agreement?
A: A bankruptcy petition stays all actions to collect a debt, including a "confession of judgment", which is the legal term for the type of contractual agreement that you describe between yourself and the defendant/debtor. So, yes, it would hinder your ability to collect. If the bankruptcy is a Chapter 7, you would be unable to enforce the debt unless there is some security interest such a a mortgage protecting your right to repayment.
Your recourse in this circumstance would be to try to prove in a bankruptcy court adversary proceeding that the debtor never intended to pay the debt. This would convert the breach of contract/loan default claim into an intentional misrepresentation (i.e., a fraud). And, a proven fraud is not dischargeable in bankruptcy. See 11 U.S.C. Section 523(a)(2).
2. If the bankruptcy has been filed by the Defendant and a stay is in place concurrent with the bankruptcy filng relative to the Plaintiff obtaining the judgment in the District Court, is it then relevant for the Plaintiff to subsequently file Adversarial Proceedings against Defendant in the bankruptcy proceedings seeking a judgment for both the $250,000 plus $6,000, as per the Settlement Agreement; as well as to have the Bankruptcy Court retain said debt as an ongoing undischarged debt, regardless of the remainder of the terms of the balance of the otherwise completed bankruptcy?
A: Actually, I didn't read this question until after I answered your first question. However, now that I've read this question, I believe that my first answer also covers this second question, as well.
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