What is the effect of filing a bankruptcy petition?
The filing of a bankruptcy petition is a lot like filing a lawsuit in the sense that the act of filing simply starts a legal proceeding without any guarantees of the outcome. The debtor will make allegations, but there is no guarantee that the court will declare the debtor bankrupt or grant any other requests. The debtor must go through a statutory process, with creditors and other third parties given the opportunity to challenge and object to the relief being sought by the debtor. Unlike any other type of legal proceeding, though, the filing of a bankruptcy petition immediately gives rise to an “automatic stay” that stops creditors from taking any further action to try to collect their debts unless or until the bankruptcy court decides to the contrary. The automatic stay is an injunction that is issued against all creditors immediately upon filing a bankruptcy petition. The intent behind the automatic stay is to give debtors temporary relief from their financial problems, giving them
