By Ryan C. Wood
The single most powerful part of filing for bankruptcy protection is the automatic stay. The automatic stay is effective as soon as a petition for bankruptcy is filed with the court. The stay stops any and all collection activity making the bankruptcy court the single point of contact for creditors to seek payment or relief.
One of the most common reasons why people seek the counsel of a bankruptcy lawyer is because of a pending lawsuit, garnishment, repossession or home foreclosure. If you have been served with a summons and complaint for an unpaid debt it will most likely be just a matter of time before the credit card company obtains a judgment against you. Filing for bankruptcy protection will stop the lawsuit because of the automatic stay and in most cases discharge the underlying debt you are being sued for.
Once a judgment is obtained it can be enforced. The judgment creditor may conduct what is called a judgment debtors examination for force the judgment debtor to disclose where they work and bank account information. The most common way to enforce a judgment is to garnish wages. Filing bankruptcy will stop the garnishment and even allow you to get some of the garnished wages back depending upon the circumstances.
If you are one or more payments behind on your vehicle loan repossession of the vehicle is something to worry about.
The stay will prevent repossession of your vehicle and depending upon your circumstances filing a Chapter 13 bankruptcy can even lower what you pay for the vehicle and the percentage rate of the loan. You generally will have to had purchase your vehicle 910 days prior to filing your bankruptcy case and your vehicle is worth less than what you still owe on the vehicle loan.
Unfortunately the last four or five years has led to many bankruptcy cases being filed because of pending home foreclosures. Filing a Chapter 13 case will allow you to continue to make the normal mortgage payments and catch up on the missed mortgage payments in the Chapter 13 plan. You may also be able to get rid an underwater second mortgage, third mortgage or equity line of credit. A motion to value or adversary proceeding to value the house must be filed along with the Chapter 13 case.
There are many reasons to seek the protection of the bankruptcy court and the automatic stay. For more information about the power of bankruptcy contact a bankruptcy lawyer in your jurisdiction for more information.