What Relief Can I Get From Creditors In Bankruptcy
In bankruptcy there are so many different factors involved in this article we are
going to look at what relief you can get from creditors while youre in bankruptcy.
In previous article weve talked about all the steps that you can take before bankruptcy. But to truly get rid of the debt thats attached to these creditors that are either writing you or calling you or harassing you, the first step you take is to file bankruptcy. The relief that you get in bankruptcy is called the automatic stay.
Once you have filed bankruptcy, the automatic stay kicks in. That means simply that all collection activity on behalf of all creditors has to stop.
so if Im in a law suit and Im being sued by my creditor and am worried about a judgment, that creditor, once Ive filed, cannot obtain a judgment against me.
If I have a garnishment going on, that garnishment must stop immediately. A lot of lawyers and court administration attorneys, judges, will refer to the automatic stay as an umbrella. So the umbrella essentially opens when the debtor files. The umbrella protects the individual whos filed.
Now its complete protection with regards to the debtor. However, the creditor can still come into the bankruptcy, they can ask questions about your assets, and, if you have debt thats collateralized by a piece of property or a car and you havent been paying on it, they can ask for it back.
For example, say I am in foreclosure and I need to stay in my house and am not prepared to move. I have a lot of other debt thats giving me some problems. I will file bankruptcy, and that will stop the foreclosure as long as my bankruptcy is going on. But once the bankruptcy is completed, the creditor once again has the right to take the house back.
So a lot of people who need time to move, to find another place to live, but yet needs to stop their foreclosure, chapter 7 is a very good tool for that.
So chapter 7 in the same instancesay, for example, Ive got a vehicle and I just dont have the ability to pay it. I know theyre going to come and repossess it. But I need to drive that car around for a few more months until I can find something else to replace it.
I can file bankruptcy. I retain the car for as long as my bankruptcy goes on. Typically, its about four to five months in Arizona. Then once my bankruptcy is completed, I have an obligation to return the car back to the creditor.
Now in both instances I dont have to pay the mortgage debt. It goes away in the bankruptcy and the same with the car debt. That loan goes away. Its discharged in the bankruptcy.
Thats really a lot of things that the automatic stay can do. You can stop a garnishment. With a garnishment, not only in a chapter 7 do you stop the garnishment, but the debt that was attached to it also goes away.
Mortgage debtsame thing. But, of course, the house goes back. The same thing with a loan on a car. The loan debt goes away and Of course, you have to return the car back. But you could still use those two items--that car or that house--while youre in your bankruptcy.
So for a lot of people the automatic stay not only gets rid of all those collection calls that weve been talking about, it gets rid of the debt attached to it, stops the harassment, and gives a lot of people peace of mind and gets rid all the debt thats attached to all of those creditors.
So thats what you can expect. Thats the ultimate relief from creditors. If thats what youre looking for, to stop those phone calls, to stop those judgments, those law suits, those garnishments, really consider a bankruptcy. That will get rid of all of that.
by: Christy Thompson
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