Suggestion of Bankruptcy Law and Legal Definition

Suggestion of bankruptcy is a document filed with a court to put it on notice that the defendant in a pending lawsuit has filed a bankruptcy case. A party can file a suggestion of bankruptcy whenever a party believes that the bankruptcy or automatic stay provision of bankruptcy code has an effect on a state court case. The suggestion of bankruptcy will include the name of court in which the bankruptcy was filed and the bankruptcy case number. The party must identify the bankruptcy trustee and give instructions on the disposition of any monies of the debtor held by the court. A copy of the suggestion of bankruptcy is served on each party to the law suit.

Upon the filing of a notice or suggestion of bankruptcy, all action against the debtor is stayed for a specified period unless otherwise ordered by the court. The plaintiff must pove that the lawsuit in question is not subject to bankruptcy or that the plaintiff has sought relief from the automatic stay. Failure to such proof within a time set by the court will typically result in a dismissal without prejudice of the claim against the defendant who filed bankruptcy. Suggestion of bankruptcy rules vary by local area.