Yes! When you file a bankruptcy, the Court issues what is called an Automatic Stay. The Automatic Stay stops garnishments, repossessions, lawsuits, foreclosures and other collection actions. This prevents your creditors from taking any type of action against you while the Automatic Stay is in effect.

Will a bankruptcy stop creditors from harassing me?

  Yes! It is a violation of federal law for a creditor to continue efforts to collect a debt after receiving written notification of a debtor filing bankruptcy. Once the Automatic Stay is in effect, your creditors are forbidden by federal law to contact you directly except under very specific circumstances.

Are there different types of bankruptcy?

Yes. Bankruptcies are covered under Federal Law and are divided into "chapters". The chapter best suited for you is based upon your unique financial situation.  For Example:

Chapter 7 - A Chapter 7 bankruptcy is designed for individuals and married couples and individuals conducting a business as a sole proprietorship. Under a Chapter 7, most unsecured debts can be discharged and you do not have to repay them. Corporations that are going out of business can file Chapter 7 bankruptcy in order to wind up the companies' affairs.

Chapter 13 - A Chapter 13 is also designed for individuals and married couples and individuals conducting a business as a sole proprietorship. A Chapter 13 is a type of debt consolidation and repayment of debts over time. The main difference between a Chapter 7 and a Chapter 13 is that a Chapter 13 involves the repayment of some or all of your creditors. A person may choose a Chapter 13 over a Chapter 7 if they are behind on their mortgage payments on their homestead property and they want to keep the property. Also, under a Chapter 13 you maintain possession of all of your property and, if you are in business, you can continue to operate your business. Corporations do not qualify for Chapter 13 protection.

Chapter 11 - A Chapter 11, although used mostly by businesses, may be used by individuals under special circumstances. Under a Chapter 11 you may continue to operate your business but your creditors and the Court must approve a plan to repay your debts.

Chapter 12 - A Chapter 12 is similar to a Chapter 13 but is used by family farmers.

What is a bankruptcy "Discharge" and how does it operate?

One of the reasons that people file bankruptcy is to get a Discharge of their debts. A discharge is a Court Order which prohibits most creditors who were listed in the bankruptcy schedules from collecting the debts. However, there are certain types of debts which are "non-dischargeable":  Examples of non-dischargeable debts include:

                    Child Support
                    Alimony
                    Most student loans
                    Court fines and criminal restitution
                    Personal injury claims caused by driving drunk
                                 or driving under the influence of drugs

What is a "reaffirmation agreement"?

Many times, even though a debt can be discharged, a person may want to reaffirm the debt. A reaffirmation agreement is simply a negotiated repayment with your creditor. This is most common in Chapter 7 cases where a person has purchased a car and would like to keep it after the bankruptcy. Other people sometimes like to maintain a credit card so that they can begin to reestablish their credit. Reaffirmation agreements are completely voluntary. A creditor cannot harass or coerce you into entering into a reaffirmation agreement. In order for a reaffirmation agreement to be effective, it:

                  1. Must be voluntary.
                  2. Must not place a heavy burden on you or your family.
                  3. Must be in your best interest.

A reaffirmation agreement can be canceled anytime before the Court issues your discharge or within 60 days after the agreement is filed with the Court, whichever gives you the most time.

BANKRUPTCY LAW IS FEDERAL LAW

This page gives you some general information on bankruptcy so that you are able to understand some of the basic principles. This is in no way intended to be a complete representation of bankruptcy law. I have simply highlighted a few of the most frequently asked questions that I receive from clients. Nothing contained on this page or anywhere throughout this web site is intended to be considered legal advice. A decision of whether or not bankruptcy is appropriate for your circumstances is not a decision that can be based solely on the information contained at this web site. If you are considering bankruptcy or you would like to find out if bankruptcy is really the best solution for you, please contact my office for an appointment. I will discuss your situation with you at no cost to you and let you know what I consider to be the best alternative for you.