What happens to lawsuits brought against me before I filed for bankruptcy?
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UPDATED: Jul 15, 2021
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Once the petition is filed, there is an automatic stay of most lawsuits and attachments against you. A “stay” means that all proceedings in the lawsuit are temporarily halted. A creditor needs to obtain relief from the stay in order to continue the lawsuit. Either party may also “remove” the lawsuit to the bankruptcy court, which might then either hear and decide the suit or remand it back to the original court. This is called an adversary proceeding.
Among the types of actions that are not stopped in bankruptcy are: Criminal actions, lawsuits to establish paternity or other domestic relations actions (custody, visitation, domestic violence), litigation to collect child support or alimony, repaying a loan from certain types of pensions, and IRS audits. Moreover, an automatic stay does not stop or postpone actions to restrict driver’s licenses or revoke professional licenses.
Regarding evictions, landlords are free to complete evictions if the landlord already has a judgment of possession. They can also file an eviction after the bankruptcy petition is filed where the eviction is based on endangerment or use of illegal substances on the leased premises. Evictions were added in a recent wave of bankruptcy reform. The lesson to remember is that because the law does change in how it may treat certain types of lawsuits in bankruptcy, make sure that your bankruptcy attorney is aware of all lawsuits or potential lawsuits before you file your petition so that they can advise you properly.