How Does Bankruptcy Protect Me from Creditors and Debt Collectors?

People who are considering bankruptcy in South Florida often hear that the bankruptcy process can provide protections from creditors and debt collectors, but it may not be immediately clear how those protections work or what form they take. There are indeed protections associated with consumer bankruptcy, and it is important to learn more about how those protections can benefit you. Our West Palm Beach bankruptcy attorneys can give you more information, and we can discuss the details of your financial circumstances with you today.

Automatic Stay Stops All Collection Actions 

The immediate way in which bankruptcy protects you from creditors and debt collectors is through the automatic stay. What is the automatic stay? It is an injunction that applies to all actions taken by creditors or debt collectors to collect money you owe. This includes all new actions (i.e., new debt collection actions like lawsuits against you cannot be initiated), and all existing actions (e.g., pending lawsuits, wage garnishment orders). The automatic stay, as its name suggests, stays all proceedings and actions against you, and it applies automatically as soon as you file for bankruptcy.

There are circumstances in which creditors may be able to have the automatic stay lifted for them, but they need to petition the court to do this. You should not assume this is going to happen, and if you have any questions or concerns about how this would work, you should speak with your bankruptcy lawyer.

Getting Back on Track with Creditors 

If you file for Chapter 13 bankruptcy (or another type of reorganization bankruptcy), you are able to reorganize your debts and catch up on payments with creditors. This is a kind of protection that is especially important for debtors with secured debt, such as homes or motor vehicles.

While the function of a reorganization bankruptcy is much different from the function of an automatic stay, it does provide a kind of protection for certain assets nonetheless. If you have any questions about how a debt reorganization or restructuring process works in Chapter 13 bankruptcy, you should talk with a lawyer as soon as you can.

Having Debt Discharged 

For consumers, whether they have filed for Chapter 7 or Chapter 13 bankruptcy, at the end of the case, eligible debts can be discharged. Once a debt is discharged, this means that you are not legally responsible for it, and creditors and debt collectors cannot come after you for the amount that was owed and discharged.

Contact a West Palm Beach Bankruptcy Attorney 

One of the major benefits of bankruptcy is that it provides immediate protections for debtors as soon as they file the bankruptcy petition. If you have questions about how bankruptcy can benefit you or whether it is the right choice for you, do not hesitate to reach out to an experienced West Palm Beach bankruptcy lawyer at Kelley, Kaplan & Eller to find out more. An attorney at our firm can discuss your financial circumstances with you today and can provide you with advice concerning the bankruptcy process in South Florida.

Sources:

law.cornell.edu/uscode/text/11

law.cornell.edu/uscode/text/11/362