Bankruptcy

Will Filing For Bankruptcy Stop A Lawsuit?

By Susanne Robicsek, North Carolina Bankruptcy Attorn

Many lawsuits will be stopped by the filing of bankruptcy, and some will end completely with that filing.  Almost all lawsuits will stop the moment the case is filed because an automatic stay prevents most creditors from continuing the lawsuit to collect a debt against a bankruptcy debtor. 

The automatic stay is like a restraining order that stops creditors from trying to collect a debt.  It protects the debtor until they receive a discharge from their debts, or until the creditor obtains relief from stay.  The biggest factor on whether or not the lawsuit will go away forever is whether or not the debt you are being sued for is for a debt that is dischargeable in the bankruptcy case itself.  If you are filing for bankruptcy and the debt that is the basis of the lawsuit will be written off in the bankruptcy case, there is no longer anything to fight over and the lawsuit will likely end when you get your discharge.  For most standard collection lawsuits, the bankruptcy will often finish the matter.

Filing for bankruptcy is often used to put an end to collection lawsuits, and can provide relief in many other types of suits.   Chapter 7 and Chapter 13  bankrupty provide different kinds of relief, so even if a Chapter 7 won’t discharge a debt, Chapter 13 might help manage the matter and provide an affordable repayment plan, and might help reduce other debts to help the borrower repay what is required.   If you are being sued, consider talking to an experienced attorney to determine if your suit is the type that will be dealt with in a bankruptcy, whether or not bankruptcy makes sense in your case and if it can provide relief and protection for you.

SEE ALSO:

Relief From The Automatic Stay by Wayne Novick Ohio Bankruptcy Lawyer

Eviction After Foreclosure. Is There An Automatic Stay? by Brett Weiss, Maryland Bankruptcy Attorney

What To Do When Creditors Are Calling While You Are In Chapter 13 Bankruptcy   by Susanne Robicsek, North Carolina Bankruptcy Attorney

Full post as published by Bankruptcy Law Network on February 22, 2010 (boomark / email).