If you are being sued for a debt, you may be wondering can bankruptcy stop a lawsuit?
The short answer is yes! When a bankruptcy is filed, the automatic stay will stop most lawsuits immediately. More importantly, this can also prevent a garnishment order.
Most lawsuits filed against a debtor are for unpaid bills or debts. These can range from credit cards, medical bills, deficiencies on automobile repossessions, personal loans, unpaid rent to an old landlord, payday loans and old utilities like cell phones, electric, gas and water.
The automatic stay essentially tells creditors to “stay put” – or stop all legal proceedings immediately. Think of it as a giant force field that protects a debtor from the actions of all creditors. The automatic stay is built into the bankruptcy code (11 U.S. Code § 362), and is perhaps the most power feature of filing bankruptcy.
The automatic stay will put a lawsuit on hold and stop it from moving forward. Many times a lawsuit will be dismissed, or flagged as “in bankruptcy” and put on hold indefinitely waiting for a bankruptcy discharge.
If the debt is dischargeable in bankruptcy, then the creditor will not be able to make you pay the debt. The debt will go away forever just like all other dischargeable debts. If you are not sure whether your debt is dischargeable, you need to see what types of debt are dischargeable in bankruptcy.
If you are wondering can bankruptcy stop a lawsuit, then you or someone you know is probably being sued and they need to speak to an attorney quickly. Once a judgment has been entered, a creditor will immediately seek an order from the court to enforce the judgment through a garnishment. Once a garnishment is in place, a debtor’s options become very limited and getting a creditor to stop the garnishment is extremely unlikely.
If you have questions about how can Bankruptcy stop a lawsuit, please give us a call at for a FREE Consultation over the phone, in person or you can email us now.