When an individual or a business files bankruptcy an “automatic stay” or “injunction” goes into effect. The purpose of the stay is to prevent a creditors’ ‘race to the courthouse’ and a diminution of the debtor’s assets that leaves some creditors holding an empty bag. In most instances, all collection activity including litigation must halt. This is a powerful tool if you or your business are involved in a lawsuit. Litigation can be costly, stressful, and time-consuming.
Immediately when a bankruptcy case is filed, an injunction, the "Automatic Stay", is imposed against most creditors who would start or continue taking action against a debtor or the debtor's property.
The Automatic Stay gives individual or business debtors breathing room to resolve debts.
In Chapter 7 cases, most debts are discharged although there are exceptions (such as taxes, fines, alimony, child support, and student loans).
In other chapters of bankruptcy such as chapter 13 and chapter 11, the automatic stay allows debtors to propose a plan of reorganization to deal with secured debts (such as mortgages, vehicle loans, business loans, and lines of credit). In most reorganizations, only a percentage of the unsecured debt is paid back. Sometimes secondary mortgages or homeowner’s association liens can be “stripped off” and discharged.
Generally, all lawsuits will be stayed or stopped against all defendants that file bankruptcy. When we represent clients in bankruptcy, we immediately notify all parties including the plaintiffs, their attorneys, and the court that the Automatic Stay is in effect and the lawsuit is stayed. We do this by filing a Suggestion of Bankruptcy in each lawsuit.
Filing bankruptcy will stop a scheduled foreclosure sale. However, you must file before the scheduled sale date to stop the foreclosure sale. If a defendant files bankruptcy after the scheduled sale date the foreclosure sale will be considered final. So, it’s important to contact our office as soon as a foreclosure suit is filed so we can help protect your real property that is being foreclosed upon and find real solutions.
Garnishments are a legal procedure that allows a judgment creditor to seize money in the bank or to garnish non-exempt wages. Once a creditor has a judgment, business bank accounts can be frozen. For individuals, the process allows time to claim exemptions to garnishment. Often these types of actions can leave individuals and businesses without cash flow and in a real predicament as to how to move forward. That’s where our team comes in, we can see if filing bankruptcy is the best solution for a way to resolve a garnishment issue.
BransonLaw has been assisting debtors through the bankruptcy process for over 30 years. We take pride in zealously representing clients to protect their assets and resolve their financial hardships. If you or your business are involved in costly and lengthy litigation, contact our firm. Our team can work with you to see how bankruptcy and the protections provided by the Automatic Stay might be the best path forward. We pride ourselves on finding creative solutions to difficult problems. Don’t delay, contact our office today to see how we can assist you.