Let’s talk about what are the benefits of filing a bankruptcy case. If you find yourself in that situation, one of the primary benefits and one of the most common reasons that people file bankruptcies is to stop collection activity by the creditor. In fact, there’s a specific provision under 11 USC 362 A of the Bankruptcy Code that is commonly known as the Automatic Stay Provision of the Bankruptcy Code.
Simply put what that means is that once the case is filed, your creditors can’t call you, they can’t threaten you. They can’t sue you, they can’t garnish you they can’t do anything along those lines. Of course, it’s not automatically as of that moment because you’re not going to have notice but your bankruptcy lawyers should notify them as soon as possible. Once they are on notice, everything will stop.
Furthermore, if your house is in foreclosure filing the bankruptcy case will at least temporarily stop the foreclosure. If your car is in the process of being repossessed, the same thing will happen. The car can no longer be repossessed. If you’re currently being garnished, that is, you’ve got a wage garnishment order that deduction has to automatically stop. Also, if you’re behind on your electric bill, filing a bankruptcy will stop the electric company from cutting off your electricity. You may have to make a small deposit to them afterward to continue the service, but at least temporarily your electricity and your other utilities cannot be shut off if you filed a bankruptcy case.
A final note along these lines is that even though you have the protection of the automatic stay, it’s not permanent. What that means is that the creditor, whether it’s the mortgage company or the car folks, or whether it’s the electric company or the employer who’s garnishing your wages, they can go ahead and ask the court for permission to continue to garnish you or to continue that foreclosure procedure, to continue to the steps necessary to repossess the vehicle.
If you have any questions exactly about what your rights are and what rights you don’t have if you file a bankruptcy case, please call me at 770-792-1000.