Under the Bankruptcy Code, filing a bankruptcy petition automatically halts efforts to collect pre-petition debts from the debtor outside of bankruptcy. 

This is the "automatic stay," and it is a command, not a suggestion.  If a creditor wants to continue a lawsuit against a debtor outside of bankruptcy, repossess collateral, terminate a lease, set off debts, or pursue other collection efforts, it first must obtain stay relief from the bankruptcy court. 

If you lend money, you know – or should know – it is a cardinal sin to collect a debt or repossess collateral after a borrower files bankruptcy.

Bankruptcy triggers the automatic stay – a command, not a suggestion, that collection activity cease. This is common knowledge, but every once in a while a case comes along that merits sharing as a reminder of what happens when lenders ignore the Bankruptcy Code.

Bankruptcy court is not the first place that comes to mind when a lender thinks about full recovery on a loan.

On Friday, August 23, 2019, the President signed into law the Family Farmer Relief Act of 2019.

Suppose you own farmland or retail commercial space and you lease your property.

What happens to your lease if the lessee files bankruptcy? And what must be done if your lessee wants to continue to honor your lease despite the bankruptcy? In In re Collins, The United States Bankruptcy Court for the Eastern District of North Carolina recently stressed that a debtor cannot informally assume an unexpired lease. The debtor must follow the strict procedures in the Bankruptcy Code or the lease will be automatically rejected.

What happens if you are a trademark licensee and your licensor files for bankruptcy protection?

When your customer is in bankruptcy, there are two major no-nos that you must remember.

First, don't violate the automatic stay, which prevents a creditor from attempting to collect a debt while the debtor is in bankruptcy unless the creditor gets prior court approval. Second, don't violate the discharge injunction, which absolves a debtor of liability for those debts covered by the bankruptcy court's discharge order. The automatic stay takes effect when the debtor files bankruptcy, while the discharge injunction typically comes at the end of the case.

In a victory for Chapter 13 debtors, the United States Court of Appeals for the Fourth Circuit recently issued a major decision that changes the way bankruptcy courts in North Carolina will deal with certain home mortgages in Chapter 13.

Can a debtor discharge a debt arising out of a deliberate or intentional act that causes injury to you?

Bankruptcy is meant to provide a fresh start for the honest but unfortunate debtor.