Do I have a legal claim to pursue the money owed to me on a lease that was terminated early?
Full Question:
Answer:
One important aspect of the bankruptcy laws is the "automatic stay." As soon as a debtor files the proper legal documents requesting bankruptcy protection, the automatic stay takes effect. This means that all efforts by creditors to collect from the debtor are, by law, frozen, and a creditor who ignores the automatic stay faces severe penalties. The automatic stay gives the debtor, the trustee, and the court time to determine the proper course of action in getting the debts repaid. A party who has a claim against the bankruptcy estate and shows good cause for not being included in the requirements of the automatic stay may ask the bankruptcy judge for "relief from the automatic stay."
When the debtor complies with the bankruptcy liquidation or reorganization plan and the plan is completed, the bankruptcy judge may discharge any remaining debt and terminate the bankruptcy case. This action also terminates the automatic stay and ends the bankruptcy court's involvement with the debtor. Typically, the debtor is left without any debts since the bankruptcy plan has repaid them or the bankruptcy court has discharged them. Also typically, the debtor is left with a poor credit rating and has difficulty borrowing money, obtaining credit cards, and financing things like homes, cars, and business ventures. Credit bureaus can report a bankruptcy for ten years after the date of filing.
Sometimes creditors offer debtors the opportunity to "reaffirm" a debt—in other words, to keep the debt and agree to pay it off even if it is eligible for liquidation. Debtors often do this when they feel it would be to their advantage to maintain a good relationship with certain creditors. Reaffirming a debt does not improve the debtor's credit rating, and leaves the debtor with an undischargable debt, thus defeating the purpose of bankruptcy as a form of financial relief.
