Does Bankruptcy Stop a Lawsuit?

Bankruptcy Will Stop Many Types of Lawsuits

The question “Does bankruptcy stop a lawsuit” is a bit more complex than a one-line answer, but in most cases, the answer is yes. One needs to examine several factors however before simply relying on that “yes”.

When a bankruptcy is filed under federal law, be it a Chapter 7 or Chapter 13, the Automatic Stay begins. The Automatic Stay, addressed in more detail here, is a federal law that says that upon the filing of a bankruptcy petition, all collection efforts must cease. This includes everything from harassing phone calls to sending bills, to lawsuits for collections. Hence, if someone is being sued for collections, or any case that involves an element of collections, that case must cease immediately and no further activity may occur.

Type of Lawsuits Stopped by Bankruptcy

Bankruptcy does not cause all legal actions to stop, only those that involve collections. This means that filing will not stop a criminal action for example, as that’s a case involving the violation of a state or federal statute, not a case for the collection of money. In addition, filing a bankruptcy will not stop action on a Restraining Order or a No Contact Petition as those have nothing to do with the transfer of money or assets.

Will bankruptcy stop a lawsuit in Cases Involving Assets?

In addition to collection cases, bankruptcy may also stop a Dissolution / Divorce, at least temporarily. If that dissolution involves the division of assets between the married couple, those assets may also be part of what is called the Bankruptcy Estate. Similar to the Automatic Stay, the Bankruptcy Estate is created at the time a bankruptcy is filed. The term refers to all of the property owned by the debtor at the time of the filing. If those assets are subject to what’s going on in a civil case, such as a divorce where assets are being divided, a bankruptcy will suspend, in most cases, resolution of those “asset” related matters until the end of the bankruptcy. See this link for more information about how long that process generally lasts.

Markwell Law, LLC

1031 Peruque Crossing Ct, Ste. B
O’Fallon, MO 63366
Phone: 636-486-1093
Fax: 636-634-3462

We are a debt relief agency according to law. We help people file for bankruptcy relief under the Bankruptcy Code. Of course, the choice of a lawyer should not be based on advertising or this website alone.

The use of this Website does not create an attorney-client relationship.

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About the author

Guss Markwell

Originally from St. Louis Missouri, I grew up in a strong Midwest and moral family who taught me right from wrong and to stand up for my rights and the rights of others. In these tough economic times, you need an advocate on your side. Why do I practice law? Often, people are facing seemingly insurmountable opposition with little or no ability to overcome great odds. It is my position that we should all be fighting for those who find themselves alone, afraid, and at times unpopular. I subscribe to the notion that a society should be judged by how it treats its most vulnerable members. I represent, and I fight for, those people. “There is light at the end of that tunnel, don’t stop.”