The automatic stay in bankruptcy immediately stops most lawsuits by your creditors. In particular, it prohibits them from filing or continuing with suits to collect an unsecured debt. However, when a creditor has a lien on property in your possession -- such as a mortgage on your house or a car loan -- the creditor can file a request with the bankruptcy court to lift the automatic stay.
Default on Secured Loans
An unsecured creditor is one that does not have a lien on anything you own; consumer credit card debt usually is considered unsecured. On the other hand, a secured creditor has a lien on property that it financed to make the purchase possible, such as a boat or a recreational vehicle. When it comes to secured creditors, bankruptcy courts usually allow a lawsuit for foreclosure or repossession to go forward if you quit paying the debt. Creditors ask the bankruptcy court to allow this by petitioning for a lift of the stay.