Home Purchase and possible lawsuit

What is the name of your state? Illinois

We are in the process of purchasing a new home. Closing is set up for 5/28. In the meantime, my husband was notified by his former employer that he owe's them $25,000.00 in loans.

My husband would request his over-time and they would give it to him in cash, with a note saying "enclosed you will find $500.00 which you requested". The note does not say anything about paying it back.

My husband was sent a letter by their Attorney stating the Company has retained them to collect money owed. I sent three certified letters to the Attorney back in November and December requesting documentation. I never received it. Then in February we received a certifed packed from another Attorney, with documentation. As we were going over this, my husbands signature was forged on a promissory note for $18,000. They put all the loan/overtime requests and forged my husbands name on it. On many of the "Enclosed you will find" by husband's name was forged on those as well.

We hired an Attorney, we wanted to countersue for forgergy. Our Attorney said if nothing was gained by it, it doesn't count. Well, I feel something was gained by it. They are suing us for the amount of $25,000.00. Our Attorney said if we offer them $5,000.00 for a promissory note my husband did sign which was $1,500 plus a little extra, they might accept that. The problem is we are buying a home in a few weeks and we don't have an extra $5,000.00 laying around. We asked our Attorney if he would let them know we are trying to get a personal loan for the amount. We explained to our Attorney that we won't be able to do it until after we close on our house. He is friends with other Attorney and he said they are ready to file a suit anytime. Our Attorney wanted us to file Bankruptcy on this. The problem is, we filed chapter 7 in 1999. These so called loans were in 1998 and 1999. If we had known we were going to be socked with this, we would have filed on these. We had no clue that these were supposed to be loans, except for the one for $1,500.00, which was taken out to file our bankruptcy. Our Attorney said we might be able to go and re-open the BK and have these put in. My BK, Attorney said that the Judge may not allow this.

How long before this suit shows up on my husbands credit? Do we have to see the Judge first and then have a Judgment placed on us? I really want this to go to court. I want to show the judge the forgery. I just don't want to mess our chances of getting our home. Also, does the Mortgage Company somehow find out a suit is being filed, even before it shows up on our credit?