The Automatic Stay: How Does It Halt Lawsuits?

Did you know that a personal bankruptcy filing induces an automatic stay, preventing collection attempts and halting lawsuits? image-bankruptcy

When you file for Chapter 13 or Chapter 7 bankruptcy, the automatic stay serves as an injunction that is meant to immediately halt the actions of creditors. This is especially useful in cases where a person may be behind on housing payments, as it could protect a debtor’s home from foreclosure.

Additionally, the automatic stay prevents creditors from initiating or continuing lawsuits against the debtor, garnish wages or otherwise demand payments from a debtor.

Occasionally, you will see the automatic stay used as a tactic in personal injury cases. Recently, the Associated Press reported that a wrongful death lawsuit stemming from a church van crash in Illinois was halted when the pastors involved in the litigation filed for bankruptcy.

According to the AP, the case will not be able to move forward until the bankruptcy of pastors Gerry and Melinda Bell is resolved in court. The couple reportedly filed for bankruptcy in June, in the U.S. Bankruptcy Court in Baltimore, one day before the wrongful death case was filed.

The crash reportedly killed five Baltimore men in 2013, when a passenger van returning from an event in California veered off the interstate.

Should I Talk to a Bankruptcy Attorney About the Automatic Stay?

Keep in mind, the automatic stay is a special protection given to everyone who has declared bankruptcy. It is important that you seek experienced legal counsel when you decide to file for bankruptcy, as you may face pressure from creditors even when the stay is in place. You will need to understand how to handle this situation, as it is illegal for a creditor to continue to pursue collection attempts after a stay is in place.

Additionally, you might have to disclose if you are facing a civil lawsuit during a bankruptcy proceeding—the failure to do so could result in penalties, including the dismissal of your case.

If your debts are dragging you down, contact our Washington DC and Maryland bankruptcy lawyer today for a consultation. You can also visit our Facebook page, our LinkedIn page, our Google+ page or our Twitter page.

Law Firm of Kevin D. Judd Maryland and Washington DC bankruptcy attorney

Judd’s Judgment: In 2012, there were more than 17,800 bankruptcy cases filed in Maryland.

Source: http://www.tribtown.com/view/story/01757de053c94397860d14fbfa7e4397/MD–Deadly-Van-Crash-Illinois