Municipal Lawyers

Once a municipal has filed a bankruptcy petition in court, the court can choose to dismiss the filed petition. This may be due to the discovery that the petition has not being authorized by the state or it is not out of good faith. As such the court may fail to recognize the filed petition. The court in this case will begin court hearings as to why the petition has been dismissed.   

The municipal bankruptcy chapter allows for an automatic stay. This is a provision under the chapter 9 codes that automatically stops lawsuits, foreclosure and all collection activities by the creditor the moment a petition is filed. Once this has been granted by the court, the creditors cannot have claims on the property of the municipal. Once this stay is filed, it prohibits the creditors actions towards the debtors officers and its inhabitants especially if the action seeks to make claim against the debtor.

There are times when some of the creditors names may not appear on the list submitted to the court by the municipal. In such a case, a proof of claim will be required from the creditor. This acts as proof indeed that the creditor has claim on the property in question. This may not be granted in situations where the creditor has failed to meet the time limit that the court has declared.

It is important to note that under the chapter 9 of bankruptcy; the court has limits on the debtors property. This means that the court has no authority to control any of the debtors revenue generated in the period when petition was filed. The court does not have to interfere with what the debtor does with the property.