One of the biggest questions people often bring to a bankruptcy lawyer is, "How will this keep creditors at bay?" Folks may be facing repossession of vehicles, foreclosure of homes, and other kinds of collection efforts. Here's how you might be able to address those concerns:
A Stay From the Court
Once your submitted petition is in the hands of a judge, a temporary stay will be issued. This is a court order that commands all of your creditors to halt collection actions pending the outcome of the case. Not only must they stop attempting collection, but they must halt all potentially harassing communications, such as phone calls and emails.
It's critical that you accurately list every creditor in your bankruptcy petition. If you don't, they won't be subject to the stay. Retain bankruptcy attorney services so a professional will help you fill out the forms and check all of the boxes.
This is a big argument for hiring a bankruptcy lawyer. Presuming a house has not already been sold, the pending bankruptcy petition prevents the sale. In the case of Chapter 7 liquidation, that will only be temporary until your assets are liquidated by the trustee. In a Chapter 13 case, you may be able to keep your house with a restructured payment option.
Delaying a Repo
The stay also prevents repossession of vehicles. If the vehicle in question is a practical daily driver for work and basic life needs, you might be able to ask the court to arrange a lump sum payment to redeem the car for its current value rather than the full amount you owe. For example, a $30,000 car that has depreciated to $10,000 might be redeemable for a lump sum payment of $10,000, if the judge allows it. Some other forms of securitized debt may be handled this way, too.
Preventing Other Collection Actions
Most other collection actions also have to be halted; this includes things like collections on personal loans, utility bills, and credit card bills. Some things are exempt from a stay, such as payment of tax bills, most student loans, and court judgments, which means you'll still be responsible for paying them.
A meeting of the creditors will be called, and creditors can state their concerns about your petition for relief. Until then, you'll still have use of the items covered by the stay. Additionally, creditors will have to abide by the court's judgment once your bankruptcy is finalized.
You can contact a bankruptcy attorney in your area for more information.