Can Bankruptcy Stop Lawsuits? Expert Analysis by John Cavitt Bankruptcy Lawyer

CAN BANKRUPTCY STOP LAWSUITS When you file a bankruptcy case , an order called the automatic stay comes into action . This injunction prevents creditors from continuing any collection activity , including attempting to win a money judgment in a lawsuit . Freezing the collection action gives the court time to sort out the available assets and divide them appropriately among the creditors . EXAMPLES OF LAWSUITS BANKRUPTCY CAN STOP Unpaid credit card balance Yes Breach of contract monetary settlements Financial disputes between business partners Criminal cases DOES BANKRUPTCY STOP ALL LAWSUITS ? No Compensation for personal injury cases , such as a traffic accident A bankruptcy cannot stop the following lawsuits : Divorce and dissolution actions In Home foreclosure Child custody and support cases