• Bankruptcy stops pending civil actions.stop image by hugy from Fotolia.com
  
  With few exceptions, declaring bankruptcy protects the individual or organization from all civil actions. The details vary depending on what type of lawsuit is pending, whether you file Chapter 7 or Chapter 13 bankruptcy and whether the opposing party has already obtained a judgment against you. The day you file for bankruptcy, you receive an automatic stay on any pending cases that will last until the close of your bankruptcy proceedings. At that time, you will likely receive a discharge of debt.
  
  

Judgment

• The culmination of a civil action is a judgment. Commonly, the judgment will order one party to pay another party a certain amount of money. A judgment signed by a judge is an automatic lien on all of the debtor's property. This means the judgment creditor can garnish wages ( take a portion of the debtor's paycheck until the judgment has been paid in full) or seize and sell the debtor's property, including real estate, cars and other property. However, when you file for bankruptcy, the judgment creditor has no right to collect on the judgment. This means the creditor cannot garnish wages or seize property during the bankruptcy proceedings.
  
  

Pending Action

• Bankruptcy also imposes an automatic stay on pending civil actions that have not yet reached judgment. This means the case stalls exactly where it was on the day you filed your bankruptcy petition. Suppose that a creditor sued you for payment, but two weeks before trial, you file for bankruptcy. The automatic stay goes into effect, requiring that the trial be placed on hold until your bankruptcy is over. This stay applies to all lawsuits that could result in you being ordered to pay any money to a plaintiff. For example, if your neighbor sues you for building a fence three feet onto his property, you could potentially be ordered to pay your neighbor damages for the trespassing fence. Such a civil action is placed on hold during bankruptcy.
  
  

Exception to the Stay

• Sometimes a creditor can pursue a civil action even after you file for bankruptcy. This occurs when the creditor applies to the court for an exception to the automatic stay. Courts rarely grant exceptions, but in certain situations, they may. Most exceptions to automatic stays involve some element of fraud.
  
  

Discharge

• While the automatic stay protects you during your bankruptcy proceedings, the debt discharge protects you after your bankruptcy proceedings have concluded. In a Chapter 7 bankruptcy, nearly all of your debts are discharged. This means that any civil action filed before you filed for bankruptcy will be discharged forever.
  
  Under Chapter 13, however, all the debts that you incurred prior to filing bankruptcy are consolidated into one monthly payment. You must make that single monthly payment for three to five years, depending on your particular repayment plan. As long as you make all the required plan payments, you will have no old outstanding debts unless you incur more debts after your bankruptcy filing.