Legal action can be stopped immediately upon filing bankruptcy.
Put simply, filing bankruptcy can stop most Lawsuits and terminate wage and other Garnishments.
Below you will find a brief overview of what happens after a creditor files a lawsuit against you. For specific questions, please contact Attorney Bankruptcy Services for a free consultation today.
A Judgment is a legal document that can be obtained when a creditor files a lawsuit against you for defaulting on your credit card payments, car loan or other debt.
A court of law issues the Judgment, which is a decree stating that one party owes another a certain sum of money.
Once a creditor obtains a Judgment against you, the creditor can utilize the Judgment to garnish your wages or bank account, or to file a lien against your home, land or personal property. Such collection actions can have devastating effects on our client’s income and overall financial situation.
Most legal proceedings involving creditor actions (with the exception of certain landlord/tenant actions) are stopped when a bankruptcy petition is filed based on what is commonly referred to as the "automatic stay".
Under the "automatic stay" provision of the bankruptcy code (11 U.S.C. 362), a creditor must immediately cease-and-desist from:
- Pursuing a Wage Garnishment or the continuation of an existing wage garnishment;
- Initiating a lawsuit after a bankruptcy filing,
- Continuing to pursue an existing lawsuit after a bankruptcy filing;
- Placing a lien against a home or other property.
In order for a creditor to continue its collection efforts after a bankruptcy filing, the creditor must file and serve a motion a formal motion with the Bankruptcy Court and provide you with an opportunity for response.
In most cases, the creditor simply stops its collection efforts against you because the debt in which the lawsuit is based is dischargeable (or debt to be eliminated in your bankruptcy case).
However, if the debt involves fraud, drunk driving, a criminal act, taxes, student loans or other non-dischargeable debts, there is a great likelihood the creditor will file an adversary lawsuit against you in the Bankruptcy Court.
Please ensure you provide us with all information regarding lawsuits, judgments and garnishments so we can effectively stop the proceedings against you.