Bankruptcy does not serve as a shield against every type of lawsuit. For example, a person may be sued for personal injury or breach of contract during the bankruptcy process.
Bankruptcy filers, though, are often protected from creditors' lawsuits during the bankruptcy process thanks to the automatic stay, which can throw a wrench in the plans of aggressive creditors.
To learn more about the protections provided by the automatic stay, contact a local bankruptcy attorney for a free consultation by filling out the form below.
Chapter 13 bankruptcy is designed to allow filers to reorganize their debts into a single payment plan. A court-appointed trustee takes a monthly payment from the filer, and distributes that money to the creditors as needed.
During the Chapter 13 payment process, which typically lasts three to five years, the following restrictions are placed on creditors:
Chapter 13 can provide a great deal of protection against lawsuits during the bankruptcy process. In addition, this type of bankruptcy may also prevent home foreclosure or stop car repossession.
The automatic stay, which prevents many creditor lawsuits during Chapter 13, also applies in Chapter 7 bankruptcy. As a result, creditors may be barred from filing a lawsuit during Chapter 7, as well.
In addition to serving as an obstacle to creditor lawsuits, the automatic stay may also:
While Chapter 7 may provide many debt relief benefits, it is limited to people who qualify financially. The Chapter 7 means test can help you determine your eligibility, and is based in part on comparing your household income to the median in your state.
To learn more about bankruptcy’s ability to prevent creditor lawsuits, contact a local bankruptcy lawyer today.