If the HOA has filed a lawsuit against you, your filing for bankruptcy will create an automatic stay which will prevent the entire lawsuit from proceeding. Under 11 U.S.C. section 362, an “automatic stay” arises when a petition is filed under any chapter of the Bankruptcy Code. No hearing, notice or order is required before the automatic stay goes into effect. The automatic stay is a cornerstone of the Bankruptcy Code. The policy behind section 362 is to protect the estate from being depleted by creditors’ lawsuits and seizures of property before the trustee has had a chance to marshal and distribute the assets. The automatic stay is also intended to give debtors breathing room by stopping all collection efforts, all harassment, and all foreclosure actions. The scope of the automatic stay is very broad.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult with your own attorney.
Bankruptcy will stop the HOA's action. A BK court can give a creditor permission to pursue its civil suit against you outside of the BK. Filing for BK might be enough to get you the time you need.
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