When you file for Chapter 7 or Chapter 13 bankruptcy, you are immediately protected from collection actions by a provision in the law called an automatic stay. This protection means that creditors cannot contact you by phone or try to collect from you in any way for accounts included in the bankruptcy. If you have a wage garnishment, those payments also stop. Keep in mind that not all debts can be included in your bankruptcy, and you are not protected from collection efforts on accounts not included in the filing. Some examples of non-dischargeable debts are student loans, taxes, child support, and alimony.
What If I Plan to Keep Some Property?
If you are planning to keep your car or other property that stands good for a secured debt, you will file a Statement of Intention to tell the court that you wish to do that. You must keep making the payments throughout the bankruptcy and continue to do so after. Since the lien holder can’t try to collect on the debt, you won’t get statements or reminders in the mail. You will have to remember to send your payments.
What If I Plan to Surrender Some Property?
If you plan to surrender a piece of property, it will be taken from you via repossession, and the debt is discharged. One common situation that occurs is when a filer has a car payment that is too high to maintain. While the automatic stay stops repossessions immediately at the time of bankruptcy, that protection only lasts for 45 days after the meeting of creditors. After that, the property can be taken if you don’t file a Statement of Intention or surrender it.
What Is the Meeting of Creditors?
When you file for bankruptcy, you are assigned a case number and a bankruptcy trustee to manage your case. One of the first tasks for the trustee is to hold a meeting of creditors. You must attend, and your creditors are invited. However, most creditors do not appear. Usually, the process takes just a few minutes and involves you and your trustee reviewing your paperwork. The meeting of creditors does not happen in a courtroom, and it does not require a judge.
Where Can I Get Help?
If you’re facing bankruptcy, you need experienced and knowledgeable legal counsel, like a bankruptcy lawyer in Memphis, TN, to walk you through the process. Contact an attorney in your area who understands the laws in your jurisdiction to advise you on the decisions you must make and enforce the protection that the automatic stay provides.
Thank you to the experts at Darrell Castle & Associates for their input into bankruptcy law.