by Michael A. Cibik, Esq.
American Bankruptcy Board Certified

Question: Will lawsuits and judgments be stopped by a bankruptcy?

Answer: The filing of either a Chapter 7 straight bankruptcy or a Chapter 13 debt adjustment stops any lawsuits from being filed and of judgments being taken against you. If a lawsuit is pending at the time of such filing, if can go no further. If a judgment had been taken, its enforcement can go no further. If a creditor has a judgment and is garnishing your wages, the garnishment must be stopped. Filing for Chapter 7 straight bankruptcy may relieve you of the obligation to pay the judgment.

In a Chapter 13 debt adjustment, you may be able to satisfy the judgment (many times at a reduced rate) over a period not to exceed five years. If the judgment creditor had placed a lien on your home, that lien may be removed if it interferes with your homestead exemption. If lawsuits or judgments are a threat or reality, the protection afforded under the bankruptcy laws may be an appropriate solution for you.

In the event a creditor begins foreclosure, you will receive a notice of the fore­closure proceeding. Unless the creditor is willing to accept payments to reinstate the loan, you will have to either pay the full balance remaining on the loan, or file bankruptcy for protection to stop the foreclosure. Under a Chapter 13 plan, you can make regular monthly payments and be given a reasonable period of time to bring your loan payments up to date to save your property.

Next week’s ques­tion: Will bankruptcy protect my personal property from repossession?