Should I file for bankruptcy instead of fighting a lawsuit I can't afford?

For some people facing this situation, yes, and it's a question genuinely worth asking early rather than after spending money on a contested defense. A Chapter 7 bankruptcy discharges, meaning legally eliminates, most ordinary contract and consumer debt, and filing triggers an automatic stay that immediately halts the pending lawsuit against you.

If you don't have significant assets at risk and the underlying claim is the type of debt that can be discharged in bankruptcy, filing for bankruptcy may genuinely serve you better financially than paying for a defense answer to the lawsuit itself. It's worth knowing that fraud claims and intentional tort claims, meaning claims alleging you deliberately harmed someone rather than simply breaching a contract, generally aren't dischargeable in bankruptcy. Given that distinction, talking with a bankruptcy attorney before deciding on this path is a reasonable and worthwhile step.