Q: Will bankruptcy stop a car lease lawsuit in Tennessee?

A: You should set up a consult with a bankruptcy attorney to discuss the impact of filing a bankruptcy. There is generally an automatic stay that goes into effect upon filing.

A: If you're being sued because you didn't pay for a car you leased and then returned, and you're thinking about filing for bankruptcy because you don't have money, bankruptcy will likely stop this lawsuit and get rid of the debt in Tennessee.

In most cases, when you file for bankruptcy, a legal protection called an automatic stay immediately kicks in. This stops most collection actions, including lawsuits like the one you're facing. This means the car dealership's lawsuit against you would be put on hold. The debt from the car lease is typically considered an unsecured debt because it's not tied to property you still own. Because of this, it's very likely that this debt would be discharged in bankruptcy, meaning you would no longer legally owe it.

You will want to reach out to an attorney to confirm that you situation would be similar.

A: Yes. At least temporarily.

A: Section 362 of the Bankruptcy Code enjoins all creditors from collection activity during the pendency of the case. Creditors can seek relief from the injunction, but it must be on good and valid grounds. They can also seek reaffirmation of the debt.

The best answer to your questions is to seek out a qualified bankruptcy lawyer in your community who can give you personalized advice.

A: It should if you use a good bankruptcy attorney and list them as a creditor.

A: You won’t have to keep making payments or defend the lawsuit while you have an active bankruptcy case, because filing triggers an automatic stay that pauses almost all collection actions, including car lease lawsuits. Once you file, the court sends a notice to the lender and the lawsuit must stop.

If you complete a Chapter 7 bankruptcy, most unsecured debts—including any deficiency claim after you returned the car—are wiped out, meaning you’d no longer owe the balance. In Chapter 13, you’d likely include the deficiency amount in your repayment plan, which could reduce what you owe over time.

Keep in mind that you need to list the lease lawsuit and the debt in your bankruptcy paperwork, and the court will determine whether any part of it is non-dischargeable. It’s wise to speak with a bankruptcy attorney in Tennessee to make sure you file correctly and protect yourself under the automatic stay.