What is bankruptcy court?

Because bankruptcy is a legal process, it happens in a court. But a lot of people don’t realize there is a special type of court that specifically deals with bankruptcy, called bankruptcy court.

 

If you’re being sued by a creditor right now, or if you’ve gotten a letter threatening that someone is going to take legal action against you, these types of lawsuits usually happen in what’s called the civil court system, so it may be in your local municipal court, small claims court, or common pleas court, for example.

 

Bankruptcy court is different. Once you file for bankruptcy, it stops all other legal action against you. If you’re in the midst of a collection lawsuit right now or are worried someone is going to file a lawsuit against you, filing for bankruptcy stops those proceedings.

 

It can also stop your wages from being garnished, your home or vehicle from being repossessed, or your home from being foreclosed on. All of this happens because once the bankruptcy is filed, the bankruptcy court decides which other actions against you can move forward and which have to stop until your bankruptcy case is over.