If you are being sued by a creditor then bankruptcy can be a solution in many cases. This is true whether it is a debt collector, credit card company, hospital or other health care provider, or almost any other debtor. As soon as a bankruptcy petition is filed with the court there is an automatic stay applied to the case and all of the listed creditors. All collection attempts against the debtor must stop immediately, and these can not be initiated until the bankruptcy case has been finished. If the debt is discharged then the creditor is barred against ever trying to collect on this specific debt at any time in the future.
There are some exceptions to the automatic stay that starts when you file for bankruptcy. Spousal support, child support, certain past due taxes, and a small number of other lawsuit types and collection activities may not be stopped by filing bankruptcy. The point of filing for bankruptcy is to allow some breathing room and a period of time without creditors hounding you.
The chapter that is used to file bankruptcy is also important and can affect the purpose of the automatic stay. Under a chapter 7 petition the time is used for the court to determine which debts should be discharged. In many cases all of the debts in the case are wiped clean and eliminated under a chapter 7 case. Student loans, criminal fines and penalties, spousal and child support, and some unpaid taxes may not qualify for discharge though. These lawsuits will not usually be stopped by filing for bankruptcy under chapter 7.
Chapter 7 bankruptcy will also usually not stop any lawsuits that are related to fraud or other criminal acts. The bankruptcy judge will also evaluate any luxury purchases that were made within 6 months of filing the bankruptcy petition. In many cases the bankruptcy judge may allow the lawsuit to proceed if the luxury purchases were made when you knew you would be filing for bankruptcy protection in the near future.
Bankruptcy may also not be helpful if you are facing a lawsuit due to any accident, death, or injury that results from illegal substance use. These lawsuits are not typically discharged as a matter of course, and any debt that results from the lawsuit will probably not qualify for discharge either. No matter which chapter you file for bankruptcy under you need to understand that the automatic stay can be provided for a limited time. If the stay expires then the creditors that you owe can start their collection activities again.
Chapter 13 bankruptcy also offers an automatic stay when the initial bankruptcy petition is filed. In this type of case the stay is intended to allow you time to come up with an ideal debt payment solution and plan. This chapter is a reorganization, and much of the debt is repaid over a period of time that can range from 3-5 years. Often any debts remaining after the repayment plan is fulfilled will be discharged, but this will depend on the specific type of debt that is still partially outstanding.