Under United States bankruptcy law, an automatic stay is an injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy. Under the United States Bankruptcy Code, the stay begins at the moment the bankruptcy petition is filed.
Additionally, upon filing the bankruptcy petition your bankruptcy attorney now represents you on all matters related to the bankruptcy. Therefore, your creditors are no longer permitted to contact you directly (no more creditor collection calls, emails, or letters).
Whether you are being threatened with a lawsuit, are already involved in a suit, or already have a judgement from a previous law suit, a Bankruptcy may provide the relief you are seeking.
Upon filing for bankruptcy any lawsuits filed against you must come to an immediate stop. Any potential lawsuits you are being threatened with must also be halted. It is also common sense and basic legal strategy not to seek (sue) a party who is insolvent (unable to pay). Depending on the lawsuit you are facing and your bankruptcy circumstances, the other party may decide to back down. As the saying goes: You can’t squeeze blood out of a turnip, (meaning that you cannot get something from a person, especially money, that they don’t have.)
A Chapter 13 bankruptcy can save your house from foreclosure.
A Chapter 7, however, will only provides a temporary stay and will generally postpone the foreclosure for 3-4 months. At the completion of a Chapter 7 case the mortgage company will likely proceed with the foreclosure, (they can also ask the judge permission to foreclose sooner).
A Chapter 13 bankruptcy will typically stop foreclosure actions during the life of your bankruptcy, typically 5 years. This time can be used to catch up on the past due payments (or take other actions) and thus have your mortgage fully reinstated and in good standing with your bank or mortgage company.
If you are facing a lawsuit, potential lawsuit, foreclosure or wage garnishments please contact us for a free 20 minute consultation at the link below.