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It has become a common trend among debtors who don't need quick relief from creditors to file bankruptcy. The fear of debt or the very thought of debt forces people or debtors to file bankruptcy even if they are current on all their bills and creditors have not called yet. Amidst such circumstances, debtors randomly choose their filing date beforehand even if they have enough time. Still, many debtors need to take quick action or they could face a foreclosure or a garnishment. According to Cornwell Law Firm, such situations can be tackled prudently if the debtors can take the right actions at the right time.
Though, there can be many ramifications, debtors can avail themselves of the protection of the automatic stay immediately after filing bankruptcy. According to 11 USC 362, which provides protections to the debtors, creditors cannot take the following actions against debtors once they file bankruptcy, which are:
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It means that creditors cannot opt for these methods to collect money after the debtors file bankruptcy. But, the debtors will have to pay the money to continue the use of collateral items or they can face the consequences. The debtors will stay protected until the time stay expires. It can also happen if the creditor called a motion to lift stay over the debtors or after the expiration of time.
According to Cornwell Bankruptcy Law Firm, it is important to understand how automatic stay works, as explained differently in Chapter 7 and Chapter 13 stay. Let us take an example from chapter 7, where the debtor needs to file a reaffirmation agreement within the time-frame of 45 days after his or her appearance in the court to retain his/her vehicle; otherwise, this stay would automatically expire at that juncture. For the same situation in chapter 13, the debtor needs to pay off the car as part of his or her plan, while the creditor will have to file a motion to repossess the car.
In a chapter 7, it is personal property versus real property in the automatic stay case. The stay will automatically expire if the debtor does not file the reaffirmation agreement within the allotted time period or time given for the repayment of debt. In case of real property or debtors' house, this stay will remain in effect until the trustee will abandon the property or declare that he/she does not own the property anymore. The fact is that the stay over real property after filing bankruptcy remains in effect until the end of the case or if the creditor files a motion to lift stay.
It is important to understand that the debtor will automatically lose protection stay, if he or she becomes serial filer. Many debtors opt for such methods, which is not wise. If the debtor files for the second time within a calendar year, he or she would get automatic stay protection only for 30 days. Yes, the debtor can file a motion to extend the stay or keep it in force for a long time. If the debtors file for a third time in a calendar year, then they will have file a motion to extend stay to get stay protection. There should be a valid reason behind the repeat fillings or they would not be granted to the debtors.
Don't try to navigate the ins and outs of 11 USC 362 or other bankruptcy laws by yourself. The investment in a Duluth bankruptcy attorney is well worth it to make sure you and your property are protected throughout the process and handling things correctly.