why bankruptcy

Can bankruptcy stop a lawsuit?

Filing for bankruptcy will stop a civil lawsuit at least in the short term . The automatic stay is what will prohibit people from collecting from you and you will be protected from a judgment being entered in the lawsuit until a creditor takes the necessary steps to get a court order allowing them to continue to pursue the suit even though there is an active bankruptcy. If you file for a bankruptcy to avoid a lawsuit many times the creditor won’t try to pursued the case anymore after filing because if they’re trying to sue you but if you file for bankruptcy then may come to know that there is no money to be had if they won the suit anyway. The automatic stay will protect you from most civil lawsuits. Depending on the kind of suit it is though, sometimes the bankruptcy court can lift the automatic stay and let the suit happen.

With a credit card lawsuit for example, bankruptcy will stop or stall the lawsuit no matter where it is at in the process until the creditor forces a relief from stay action – if that would even be possible depending on the nature of their case.    How bankruptcy will end up affecting a credit card lawsuit highly depends on whether or not you have filed for a Chapter 7 or Chapter 13 bankruptcy, as the conditions can be dependent on which one you filed for – you should seek advice on this from an experienced bankruptcy lawyer.

Claims that are based on fraud are nondischargeable in bankruptcy if proven to fraud in the bankruptcy case. Many of the lawsuits against debtors involving unpaid debts can be discharged in a bankruptcy. If you don’t pay credit card bills, medical bills, personal loans, child support and other loans like that it is possible that your creditor can bring a breach of contract against you and prevent you from stopping the lawsuit if they can prove fraud. You will want to talk with an experienced bankruptcy lawyer to be able to see if filing for bankruptcy will stop the lawsuit from happening.

 

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