Filing for Chapter 7 Bankruptcy to Stop a Lawsuit
Have you recently received notice of a civil lawsuit against you that was filed by a creditor or debt collector in an attempt to recover debt you owe? Creditors and debt collectors can file lawsuits against debtors when they are in default, and even when they are delinquent on debts in some circumstances. Under Florida law, the statute of limitations on most debts is typically either four or five years. As long as that clock has not run out, you can be sued by a creditor or debt collector seeking to obtain a judgment against you. If you are sued and the creditor or debt collector wins the lawsuit and a judgment against you, they can often take additional steps to recover what you owe, such as by garnishing your wages or your bank account.
If you are eligible for Chapter 7 bankruptcy, not only can you stop any pending lawsuits that have been filed against you, but you also may be able to discharge the debt for which you are being sued. Our West Palm Beach bankruptcy attorneys can explain in more detail.
Automatic Stay Will Stop the Lawsuit
Whenever an individual files for bankruptcy (or a business, too), an injunction known as the “automatic stay” immediately halts any legal actions against the debtor who has filed the bankruptcy petition. This means no new lawsuits can be filed, no existing lawsuits can move forward, garnishment orders are halted, and more.
The automatic stay does not last forever, and in certain cases a creditor can petition the court to lift it (particularly in cases of secured debts). However, if you are filing for Chapter 7 bankruptcy, you can often have the debt associated with the lawsuit discharged.
Discharging Debts in Chapter 7 Bankruptcy
The automatic stay will remain in place throughout your bankruptcy proceedings. At the end of a Chapter 7 case — which usually lasts from about four to six months — your eligible debts can be wiped out by the court in a legal action known as a “discharge.” As long as your debts are not considered “exceptions to discharge” under the bankruptcy code, they can be discharged, and you will no longer be liable for them at the end of your bankruptcy case.
Accordingly, no lawsuits can be filed against you for those debts, and no existing lawsuits to collect discharged debts can move forward.
Contact a West Palm Beach Bankruptcy Attorney Today for Assistance Filing for Bankruptcy and Using the Automatic Stay to Stop the Lawsuit Against You
When you are facing a lawsuit from a creditor and you cannot afford to repay any of your debt or to face a judgment against you, it can feel daunting to think about potential options and solutions. For many individuals who are in this situation, a Chapter 7 bankruptcy filing can provide you with relief. As we discussed above, as soon as you file for Chapter 7 bankruptcy, the automatic stay will stop the lawsuit against you from proceeding. Assuming the debt for which you are being sued is a dischargeable debt (and not an exception to discharge), you may be able to have the debt discharged, giving you a fresh start financially. One of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan Delaney & Eller, PLLC can discuss your circumstances with you today and your eligibility for Chapter 7 bankruptcy.
Source:
law.cornell.edu/uscode/text/11/362
