Two important forms of protection are available to debtors whose bankruptcy petitions are accepted by the court – the automatic stay and the debt discharge order. The automatic stay goes into effect the moment the judge accepts your bankruptcy petition. Specifically, it prevents all collection activity by your creditors outside of the bankruptcy proceeding until the proceedings are completed. The court will enter a debt discharge order once proceedings are complete, and this order will apply to all debts that are included in your bankruptcy. Some types of debts, however, cannot be discharged even if you file for bankruptcy.
Foreclosure and Repossession
Your creditors may seek to foreclose on your home or repossess your car or other property if it is used to secure a debt. The automatic stay prevents this from happening, as long as you file for bankruptcy before your property is put up for sale. In a Chapter 7 bankruptcy, creditors can resume foreclosure or repossession activity with special permission from the bankruptcy court, as long as these items are not exempt from seizure under bankruptcy law. In a Chapter 13 bankruptcy, you may be able to keep these items if they are included in your Chapter 13 repayment plan and you keep up with your repayment installments.
Lawsuits
An automatic stay will dispose of an ongoing lawsuit against you, because the bankruptcy court will take jurisdiction over your debts. If a judgment is entered against you before you file for bankruptcy, the automatic stay will prevent creditors from collecting on the judgment during bankruptcy proceedings. Moreover, a Chapter 7 bankruptcy will eliminate the underlying debt so that you never have to pay it, as long as the debt is dischargeable in bankruptcy. Under Chapter 13, you will have to pay back at least some of the debt.
Wage Garnishment and Bank Levies
Creditors may seek to garnish your wages or seize money from your bank account to satisfy a debt. An automatic stay can prevent this from happening or, if it is already happening, prevent it from continuing. A discharge order can eliminate the underlying debt so that your creditors are left with no further legal right to take your money. In some cases, your attorney can even have money returned to you that has been recently seized from your bank account.
Telephone Harassment
An automatic stay will prohibit creditors from contacting you or your employer by telephone, and it will impose stiff penalties on creditors who violate this prohibition. Even without an automatic stay, if your creditors are particularly persistent or aggressive, you may have a legal claim under the federal Fair Debt Collection Practices Act and Michigan debt collection law. You can even assert these claims as counterclaims in a lawsuit that a creditor brings against you to collect the debt. Unfortunately, these statutes are widely ignored by creditors, simply because few debtors know their rights and even fewer hire an attorney to assert these rights on their behalf.
Married Debtors
If you are married and file for bankruptcy separately (rather than filing jointly with your spouse), your bankruptcy will not be entered on your spouse’s credit record. Even so, in some cases it is advisable to file for bankruptcy jointly with your spouse.
Call Attorney Nancy Neal Joyce Now to Secure Your Financial Freedom
Attorney Nancy Neal Joyce has used bankruptcy law to protect a multitude of clients from the debt collection activities listed above. Call her Livonia, Michigan office at (734) 427-7772 to schedule a face-to-face meeting or a telephone conference. She offers aggressive representation at reasonable rates, and she serves the entire greater Detroit area. Contact her today to learn more about how she can make a difference for you.
