Legal FAQs

How does a bankruptcy affect ongoing litigation?

Under the Bankruptcy and Insolvency Act, the general rule is that the bankruptcy of a debtor imposes an automatic stay of on going action against the debtor for the recovery of a claim provable in bankruptcy. The creditor cannot prosecute the action without first obtaining leave of the court. A debtor’s bankruptcy does not prevent a secured creditor from realizing upon or dealing with its security.

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The answers to the question of the day are intended to provide helpful general information; however, it is not legal advice. You must consult a lawyer if you have a specific legal question or issue that requires an answer.