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Bankruptcy protects against lawsuits and repossessions

On Behalf of | Oct 28, 2023 | Bankruptcy Law |

Many people in Mississippi struggle to pay their debts. Some may be able to get things back on track by adjusting their spending habits or generating extra cash flow by taking on a second job or launching a side hustle. For others, filing for bankruptcy may be the most viable option, especially if an individual is worried about a possible lawsuit or having a vehicle repossessed.  

Chapter 7 or Chapter 13 bankruptcy filings activate an “automatic stay,” barring creditors from pursuing any efforts to collect a debt from the filer. This enables bankruptcy proceedings to occur without interruption or complication, such as a debt collector filing a lawsuit or a creditor repossessing a vehicle. When an individual files a bankruptcy petition, these types of legal actions are prohibited pending a further order of the court. 

What to do if a lawsuit or repossession occurs after filing for bankruptcy 

It is possible that a debt collector or creditor may initiate a lawsuit or repossession after bankruptcy proceedings have already begun. If there is an automatic stay in place and the creditor has received notice of the proceedings, such actions are invalid. An individual may request a dismissal of the action. It is never wise to disregard a court order, which means a person should formally respond to a court summons or notice to appear before a judge. It is always best to address an issue through the proper legal channels.  

Filing for bankruptcy in Mississippi is a prudent decision when liabilities have exceeded assets and there is no hope in sight to resolve debt. With an automatic stay in place, an individual can obtain debt relief and begin working toward solvency again. Those facing legal problems regarding bankruptcy or debt collection may seek immediate support by scheduling a consultation with an experienced attorney.