As a Michigan Bankruptcy Attorney who handles cases in Macomb, Oakland, Wayne, St. Clair and Sanilac Counties, my office is often called by people literally “freaking out” over being served with Lawsuit papers, or receiving notice that a Judgment has been taken against them, or that a Garnishment has been placed against their wages.

I have good news here: If a person is eligible to file for Bankruptcy, then those proceedings can be stopped dead in their tracks. 

Moreover, in many cases, even if a person’s wages have already been garnished, those funds can be recovered.

To understand how powerful the Bankruptcy Laws are, and how they can essentially kill a lawsuit at any stage, it helps to understand a little bit about those laws.

Under the Bankruptcy Laws, known also as the Bankruptcy Code, the moment a person files for Bankruptcy, certain things automatically happen.  The most important of those is known as the “Automatic Stay.”  The Automatic Stay is a provision of the Bankruptcy Code which essentially freezes all proceedings against the person who filed for Bankruptcy at the instant it’s filed.  This means that anything that happens, even 1 second after the Bankruptcy is filed, is essentially considered void. 

Therefore, a person who files for Bankruptcy is protected, or kind of “immune” from any Lawsuits, Judgments, Garnishments or other Collection efforts at the very moment their case is filed.  This is perhaps the strongest single law on the books. Think of it as a great big hammer that smashes everything to bits.

In a very real way, the Automatic Stay is a kind of legal multi-tool:  

• If someone is about to sue you, once the Bankruptcy is filed, they cannot. 
  
• If they have already sued you, and the case is still active, Bankruptcy law requires that the Court where the case is pending close it down, immediately upon notice of the Bankruptcy filing. 
  
• If someone has sued you, and has already obtained a judgment, then the filing of a Bankruptcy essentially “voids” that judgment. 
  
• If someone has begun collecting on a judgment they obtained against you, Bankruptcy Law not only stops any further collection activities, but may also require that the person who obtained the judgment pay you any amount of money back that they took, if the total amount is greater than $600, and was taken within 90 days before the date the Bankruptcy was filed.