Bankruptcy Stops Creditor Collections Immediately
While the ultimate goal of bankruptcy is to get a discharge of indebtedness, many people are more interested in a more immediate benefit — putting a stop to garnishment, foreclosure and other creditor collections. To learn how a bankruptcy filing can relieve debt pressure right away, contact an experienced attorney at the law firm of Steven E. Mirsky, LLC, in Rockville, Frederick or Laurel.
Call 866-654-2003 for a free consultation about bankruptcy in Maryland.
For most people, bankruptcy makes best sense when you stand to lose something important: your home, a substantial part of your earnings, or your bank balance. In order for bankruptcy to offer any meaningful benefits, it needs to give the debtor a period of freedom from creditor collection efforts. As a result, the Bankruptcy Code puts an immediate stop to just about everything a creditor can do to you, as of the time the bankruptcy case is filed:
- Lawsuits
- Mortgage foreclosures
- Garnishment of wages
- Attachment of bank accounts or other assets
- Repossession of motor vehicles or other personal property
- Enforcement of judgments
- Evictions
- Collection letters, phone calls or e-mails
The provision of the Bankruptcy Code that stops collections is called the automatic stay. There are a few exceptions to the automatic stay. A bankruptcy filing will not interrupt criminal cases, paternity cases or court proceedings to establish or collect child or spousal support. For the most part, however, your creditors have to leave you alone except as provided in the Bankruptcy Code exceptions to the automatic stay.
Creditors can request relief from the automatic stay
When collateral secures a creditor’s claim, such as a home mortgage or a car loan, the creditor has the right to ask the court for relief from the automatic stay to resume collection efforts, if the creditor can show that a lack of equity or ability to resume payments means that its secured position is threatened.
In many cases, our lawyers can work out an agreement with your creditor so that the automatic stay remains in effect. If the facts are in your favor, we can also fight the motion for relief from the stay in court.
Many of our clients find that the protection of automatic stay for a few months is all they need to climb out of a deep financial hole. For additional information about how you can benefit from this feature of the bankruptcy process, contact an attorney at the law firm of Steven E. Mirsky for a free consultation.
