As there is no law that can define the exact time to be taken in the settlement procedure of any lawsuit, so the settlement of a lawsuit can be a troublesome and time-consuming process. From some recent researches it has been inferred that bankruptcy can provide a little relaxation from lawsuits. Before proceeding with a request for bankruptcy, it is highly recommended that an individual must consult an attorney because there are some types of lawsuits that cannot be solved even if bankruptcy is declared. The points highlighted below can better help in understanding the use of bankruptcy to thwart lawsuits:

1. Use of Automatic Stays

Automatic stay is provided to the individual if bankruptcy is filed. Consequently, many legal claims and lawsuits are brought to a dead end. However lawsuits involving certain centralized loan programs, tax cases are not covered under automatic stays. Lawsuits involving immoral trials and child support are specifically not included as part of an automatic stay.

2. Behaviors of the Bankruptcy Court

If the appeal for bankruptcy is approved and the automatic stay is effective, then the actions highlighted below are specifically barred:

- The filing of any lawsuit or claim against the defendant

- Attempt to take possession of defendant's property.

- Attempt to cease any service or benefit that the defendant is currently getting etc

Anyone claiming against a bankrupt party does not obey these rules is legally responsible for disrespect of court's decision and possible legal action him/herself.

- Mediation and the threat of bankruptcy

Oftentimes, the beleaguered creditor can take actions prior to bankruptcy and come to a settlement with the lender. Bankruptcy mediation is the negotiation process between an objective third party and the parties (which could be an independent bankruptcy attorney) trying to reach a settlement. In case the legal advice is available to the creditor, he/she can sometimes even negotiate an agreement that can reduce or even eliminate the unpaid challenged amount. Under bankruptcy, the final decision about the creditor's ability to pay debt is determined by the court, that is why, the borrower often considers a reduced amount. But if negotiations fail, then threatening a bankruptcy is likely to compel the creditor to go bankrupt.

Thus in difficult times, bankruptcy can protect the debtors against the creditors who can take actions like filing lawsuits, foreclosing homes etc in order to collect their debts. Consumers in high needs of money to pay off their debts, have the option of filing a bankruptcy claim to avoid paying these sums and secure themselves from any trouble that might follow. Eligibility to declare bankruptcy depends on the type of declaration one is going to do like his income, the nature of debts, and value of the assets. For example, Chapter13 bankruptcy allows a debtor to pay back his/ her debts at rate proportionate to his/her income level over the course of three or five years.

Note: One cannot file bankruptcy if he/she has a prior bankruptcy appeal that was dismissed in the past 180 days for any reason.