Have you ever wondered if filing for bankruptcy could pause or even stop lawsuits that are related to your debts? If you’re in Greenville, NC, and you’re juggling both debt and the threat of legal action, bankruptcy might offer a powerful solution. This guide will explore how bankruptcy, particularly the legal tool called the “automatic stay,” can impact various lawsuits you might be facing. We’ll dive into how this works for different types of legal challenges and explain the process in simple terms.
In a previous post, I’ve talked about automatic stay and how it can help. You can reference the article Greenville NC Debt Relief: How an Automatic Stay Can Help During Bankruptcy
Types of Lawsuits Affected by Filing for Bankruptcy
Civil Lawsuits for Debts
When you file for bankruptcy, a rule called the “automatic stay” immediately stops most collection activities. This means if someone is suing you over debts like credit card bills, hospital bills, or personal loans, these lawsuits have to stop right away. The court tells your creditors they can’t continue with their lawsuits, garnish your wages, or call you to demand payment as long as the automatic stay is in effect.
This pause gives you the chance to handle your debts under the bankruptcy court’s protection. It’s like hitting the pause button on a movie. Everything stops and waits until the bankruptcy process decides how to handle your debts. This can provide a huge relief if you’re feeling overwhelmed by calls and legal threats from people you owe money to.
Lawsuits for Repossession, Foreclosure, and Eviction
Bankruptcy can also affect lawsuits where someone is trying to take away your property. For example, if your car lender wants to repossess your vehicle or your mortgage lender has started foreclosure actions to take your home, filing for bankruptcy can temporarily stop these processes.
If you file for Chapter 13 bankruptcy, you can keep your property and set up a plan to catch up on your payments. This can be incredibly helpful if you’ve fallen behind but can still afford to make regular payments if given some time to catch up.
When it comes to eviction, the automatic stay might protect you temporarily, especially if your landlord hasn’t yet gotten a court order. However, if the landlord already has a judgment against you for eviction, the bankruptcy might not help. It’s important to know exactly where you stand in any eviction proceedings if you’re considering bankruptcy as a solution.
Collection of Overdue Taxes
While bankruptcy can stop many types of lawsuits and collections, there are exceptions, especially with overdue taxes. The automatic stay can prevent the IRS from garnishing your wages or seizing your bank account. However, they will still need to audit you, assess new tax liabilities, or demand tax returns.
If you owe significant back taxes, Chapter 13 bankruptcy might help you set up a repayment plan that fits your budget without the crushing penalties and interest that can build up in tax debts. It’s a structured way to handle tax debts that you can’t afford to pay all at once. In most cases, the penalties and interest on the taxes owed can be wiped out by a Chapter 13 bankruptcy.
Utility Disconnections
Are you worried about having your utilities shut off? Filing for bankruptcy can prevent your utility providers from disconnecting. In most cases, the utility company will create a new account with a zero balance, but may require you to pay a deposit.
Exceptions to the Automatic Stay
While the automatic stay is a powerful tool, it doesn’t cover every situation. Here are some exceptions where the stay might not stop legal actions:
- Criminal Proceedings: If you’re involved in criminal cases, filing for bankruptcy won’t stop these. Bankruptcy only deals with debt-related issues.
- Support and Custody Cases: Legal proceedings involving child support, spousal support, or child custody are not stopped by the automatic stay.
- Multiple Filings: If this isn’t your first time filing for bankruptcy, the automatic stay might be limited. For example, if you filed for bankruptcy in recent years, the stay might only last for 30 days or not apply at all unless the court extends it.
Navigating Lawsuits During Bankruptcy
Filing for bankruptcy when facing lawsuits can be tricky. It’s important to time your filing correctly. For instance, filing before a creditor gets a judgment against you can be more beneficial. Once a creditor has a legal judgment, some options, like wiping out the debt in bankruptcy, may no longer be available.
Consulting with a knowledgeable bankruptcy lawyer is crucial. I am here to help you understand the best timing and strategy for filing based on your specific circumstances. I’ll also guide you through the bankruptcy process, ensuring you utilize every benefit bankruptcy can offer.
If you’re in Greenville, NC or you live in the surrounding towns, and struggling with debt and lawsuits, consider reaching out for advice. Bankruptcy might just be the fresh start you need.