There are many ways that bankruptcy can “save the day, and make debt go away!” But let’s not forget that bankruptcy can be a tool that protects consumers at the same time. For starters, there are bankruptcy laws that prevent fraud and harassment. Also according to the bankruptcy code, an “automatic stay” becomes effective the moment a bankruptcy petition is filed.
The Automatic Stay & Bankruptcy Process Can:
One of the first things we will explain about the process of bankruptcy is the power of the automatic stay to protect consumers. The automatic stay remains effective despite newer bankruptcy laws intended to protect creditors. Although the recent law changes may limit the protection of the automatic stay, in most cases, when you file for bankruptcy relief your creditors must stop attempting to collect from you. Creditors cannot continue to call you or send you collection letters. The Bankruptcy Code protects you This “stay” prohibits all collection activity after you file for bankruptcy relief. The automatic stay stops any lawsuit filed against you and almost any other action against you, your property and your paycheck. Once the automatic stay is in place, you can refer collection calls to our office.
Foreclosure: If your home is in foreclosure, the automatic stay will stop the foreclosure action. Chapter 13 is your best bankruptcy option to save your home from foreclosure. Ordinarily, you can file a chapter 13 to save your home anytime prior to the forced sale of your home.
Utility shut-offs: If your lights and gas have been disconnected by the utility company, the automatic stay will force the utility company to reconnect your service. If the utility company is threatening to shut-off your lights and heat, filing bankruptcy will prevent the utility company from disconnecting your service.
Car Repossession: The repo man cannot take your car after you file for bankruptcy relief. The automatic stay prevents your creditors from taking your car. If you want to keep your financed vehicle, you must continue to make your car payments after you file for Chapter 7 bankruptcy. If you filed Chapter 13, you must make all of your trustee payments or the car creditor can ask the judge to “lift the stay” so they can lawfully repossess your car.
Lawsuits/Garnishments: Filing bankruptcy stops lawsuits and wage garnishments immediately. The automatic stay protects your paycheck from your creditors. You will take home a full paycheck and you will probably be able to eliminate that entire outstanding debt in bankruptcy.
Public Benefit Over payments: If you receive public assistance in Wisconsin and the agency mistakenly overpaid you, the agency can collect the over payment. The automatic stay stops the agency from collecting the over payment. The debt will be eliminated in bankruptcy unless the government agency objects based on fraud.
Tax Levies: The automatic stay will stop the IRS from issuing a tax levy or seizing your property. However, the IRS can still audit you, demand you file your tax returns, assess you a tax liability and demand you pay the assessment.
Criminal Proceedings: The automatic stay will not stop a criminal action. If you are charged with driving under the influence, filing bankruptcy will not stop the state from prosecuting you. However, if a criminal action can be separated into criminal and civil liabilities, the creditor may be prevented from collecting on the underlying debt.
Domestic Support Actions: The automatic stay will not stop a lawsuit against you seeking to establish paternity or to establish, modify, or collect child support or maintenance. More about what bankruptcy will NOT do
To further protect consumers, the automatic stay will remain in effect until:
Learn about how new bankruptcy laws affect your particular situation. Contact an attorney at Debt Advisors Law Offices to schedule a free initial consultation at any of our six Wisconsin locations. Or, complete secure online evaluation form and an attorney will follow up with you promptly.