What happens when your debtor files for bankruptcy either before, during, or after the lawsuit?
As soon as your debtor files for bankruptcy the court will put an automatic stay on all property of the bankruptcy estate. Under section 362 of the Bankruptcy Code an automatic stay prevents creditors and others from pursuing debtors for debts owed on property of the estate.
The actual treatment of a creditor depends primarily on whether your claim is secured or unsecured and what chapter your debtor has filed under, Chapter 7, 11, or 13. Below are some basics regarding these three bankruptcy chapters. 
Chapter 7
Liquidation by which a trustee takes over the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor’s right to retain certain exempt property in most chapter 7 cases. In most chapter 7 cases if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. Debtors do not have an absolute right to a discharge so the trustee on the case, the U.S. trustee, and the creditor can object to discharge for failure to provide requested tax documents, failure to complete a course on personal financial management, transfer or concealment of property with intent to hinder, delay, or defraud creditors, and more grounds stated in section 727 of the bankruptcy code.
Chapter 11
Reorganization used by primarily by commercial enterprises that desire to continue operating as a business and repay creditors through a court-approved plan of reorganization. The debtor usually has the exclusive right to file a plan of reorganization for the first 120 days after filing it and must provide creditors with a disclosure statement containing info adequate to enable creditors to evaluate the plan. The court approves or disapproves the plan of reorganization. The debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business.  Creditors
Chapter 13
Adjustment of debts of an individual with regular income. Chapter 13 is preferable to Chapter 7 because it enables the debtor to keep a valuable asset, such as a house and it allows the debtor to propose a “plan” to repay creditors over time usually 3 to 5 years.
Discharge in Bankruptcy
A discharge releases the debtor from personal liability for certain types of debts. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts.
The timing of a discharge is governed by the chapter of bankruptcy file. A chapter 7 discharge happens on the expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse. In a chapter 11, 12, and 13 case the court generally grants the discharge after the debtor completes all payments under the plan.
Not all debts can be discharged. The debts that are dischargeable vary under each chapter of the Bankruptcy Code. Under Section 523(a) debts obtained by fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny, for a domestic support obligation, for willful and malicious injury by the debtor to another entity or to the property of another entity among others would not be dischargeable.
For a creditor’s claim to survive the discharge they must file a lawsuit called an adversary proceeding in the bankruptcy court and prove that the debtor committed fiduciary fraud, or an intentional tort as stated in section 523(a).

Can a default judgement awarded on a debt claim be used to obtain an order of non-dischargeability?
Where a creditor obtains a default judgement on a debt claim the issue is whether the creditor may use that judgment to render his debt claim non-dischargeable. Typically claim preclusion or res judicata is inapplicable in bankruptcy nondischargeable proceedings. However, this does not apply to issue preclusion and collateral estoppel. Section 523 lists the exceptions to discharge among them 523(a)(4) which says that a debtor cannot discharge debt obtained by fraud while acting in a fiduciary capacity.
In Pancake, the Creditor (Sunbelt) sought judgement that his debt was nondischargeable under the fiduciary fraud exception after Sunbelt had been awarded a default judgement in its state fraud action against the debtor (Pancake). Pancake v. Reliance Ins. Co. (In re Pancake), 106 F.3d 1242 (5th Cir. 1997). The court held that because Sunbelt never conducted a hearing to show that Pancake actually defrauded them the state court judgement does not have preclusive effect. Pancake, 106 F.3d 1242.
While Sunbelt has a judgment against Pancake for fraud in his fiduciary capacity because the claim was not actually litigated it will not be given preclusive effect in bankruptcy court. As such, default judgements cannot be used to obtain an order of non-dischargeability.