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JP, Attorney
Category: Bankruptcy Law
Satisfied Customers: 109
Experience:  Represented creditors and individuals in bankruptcy and consumer matters.
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I would like to know when someone files for chapter 7 and gets

Resolved Question:

I would like to know when someone files for chapter 7 and gets a notice of stay against me what does that mean. Does that mean if the person owes me $4000. I won't be able to get my money I have a jugement from small claims court against the person. Or what can I do?
Submitted: 9 years ago.
Category: Bankruptcy Law
Expert:  JP replied 9 years ago.

When a bankruptcy case is filed an automatic stay immediately goes into effect. An automatic stay is an injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed, even in your situation where you already have obtained a judgment in small claims court.


Unfortunately, if you never perfected a lien to secure your judgment, your debt will be classified as an unsecured debt to be discharged in the chapter 7 case. Basically, this will mean that your debt will be cancelled and you will forever be prevented from attempting to collect the debt. If you try to collect the debt without first seeking relief from the stay through the bankruptcy court, you will be violating the stay in place which will be a violation of federal law.


If you want to pursue the collectability of your debt, you should visit with a bankruptcy attorney in your area to fully evaluate your situation. However, if you are the holder of a secured debt, then it is not likely that you will be able to recover your debt from the bankrupt debtor.


I hope you found this information helpful.


Best Regards.

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