By: Erick R. Bohm
How does filing for bankruptcy protect you from creditors? There’s a provision in the Bankruptcy Code called the Automatic Stay. After filing your case with the bankruptcy court, you are legally protected from garnishment, foreclosure, collections, lawsuits, etc. Just like everything else, there are a few exceptions to this, but we’ll cover that in more detail below.
An automatic stay is just a fancy way of saying “stopped.” Now, this doesn’t mean creditors are stopped forever from collecting on the debts you owe them, but it does provide you an opportunity to get back in control of the situation you’re going through. In order for creditors to resume collection activities against you, creditors must get approval from the court to do so. In a Chapter 7 Bankruptcy, absent court approval, creditors cannot collect on the debts you owe them from the time you file your case until you receive your discharge (approximately four to six months). In a Chapter 13, creditors cannot collect on the debts you owe them, absent court approval, for either thirty-six or sixty months (depending on how your Chapter 13 is structured). So, by means of the automatic stay provision, creditors are temporarily stopped from collecting on the debts you owe them. Either way, any debts that are discharged through the bankruptcy are discharged forever.
Whether you file a Chapter 7 or a Chapter 13 Bankruptcy, you are protected from your creditors during the pendency of the proceeding. As many of our clients know, creditors can be ruthless. They are willing to break the law in an attempt to scare individuals into settling their debts. Here I will discuss how bankruptcy can benefit individuals and protect them from different forms of collection activities.
Are your wages being garnished or are you concerned they may be garnished soon? Well, bankruptcy can certainly help in preventing this from happening. Filing for bankruptcy immediately prevents creditors from collecting on debts through garnishment. For example, say your wages are being garnished by the federal government for taxes you owe. As soon as your case is filed with the court, the IRS can no longer garnish your wages. In fact, you may be able to recover some of the wages that have been garnished if certain conditions are met. If your wages are being garnished, and you want this to stop, contact us and we can discuss your options.
Are you sick and tired of receiving non-stop phone calls from creditors? Are you at the point where you open the mail, see you have something from a creditor, and throw the mail in the trash? If so, you’re not alone. Many of our clients are stressed from the anxiety that creditors can cause. Bankruptcy, through the automatic stay, prohibits creditors from collecting on debts after filing bankruptcy, in most cases. As soon as you file your case, you’re protected from your creditors. The harassing phone calls, emails, and letters all come to a stop. In fact, it is illegal for creditors to continue collection activity against you after filing your case unless they receive court approval to do so. If you hire us, we will make sure your rights are protected. In the event a creditor tries to collect from you after filing your case, we will reach out to the creditor and make sure they leave you alone.
Are you concerned your house is going to be foreclosed on? Have you already received notification from the bank they’re going to initiate a foreclosure? If so, bankruptcy can help. Once your case is filed, the automatic stay prevents banks from beginning, continuing, or completing a foreclosure. You are protected from the foreclosure of a home throughout your bankruptcy. Depending on the specific facts of your case, a Chapter 7 or Chapter 13 may be a good option for you. If you reach out to us and tell us the specific facts of your situation, our knowledgeable MN Bankruptcy Attorneys can give you options you need to hear.
If you’re facing a judgment or received notification of a lawsuit, give us a call. Depending on the circumstances, filing bankruptcy may give you protection. After filing your bankruptcy petition, you will be protected from the judgment and any accompanying lawsuits. If the debts associated with the bankruptcy are dischargeable, the obligations surrounding the judgment will go away. However, if a judgment has already been entered against you, we will need to have the judgment removed from your record after the bankruptcy is completed. The process of removing the judgment from your record is something we can help you with.
Are you concerned about your vehicle, or other property, being repossessed? If you think your vehicle might be repossessed, bankruptcy can help. As soon as your case is filed with the bankruptcy court, the property you owe money on cannot be repossessed unless the creditor receives approval from the court. If a creditor does not receive approval from the court, your property cannot be repossessed until your bankruptcy is approved and you receive your discharge. Depending on the debt owed, repossession activities may resume after you receive your discharge. Give us a call and let us help. We’ll review the facts and let you know how repossession will factor into your situation.
If you owe family support obligations, the automatic stay will not prevent collecting on these debts. Any proceedings in play at the time of filing bankruptcy, or after, for either child support or divorce continue and trump the automatic stay. Additionally, tax proceedings continue to survive the automatic stay. As mentioned earlier, the automatic stay will prevent garnishment for tax debts, but the taxing authority still has the right to continue certain actions in an attempt to collect on taxes you owe. Also, if you owe fines or restitution for criminal convictions, you will be required to pay those outside of the bankruptcy.
In most cases, you’re protected from creditors as soon as your case is filed with the bankruptcy court. However, even after your case is filed, creditors can still collect on debts if they get leave from the court. What does this mean? Leave from the court means “approval.” A creditor who wishes to collect on debts that are owed by a debtor after the debtor has filed for bankruptcy must file a motion with the court seeking to have the automatic stay lifted, as it pertains to the specific debt owed. The court will sometimes grant the creditors motion depending on the situation. If you owe money on a secured debt (ex: home or car loan) and you have stopped paying your bill for the secured debt, a creditor will likely file a motion to have the automatic stay lifted. Once the creditor files their motion, you will have an opportunity to object to the motion. If you object, there will then be a hearing with a judge as to whether or not the motion should be granted. If the motion is granted, the creditor will be entitled to resume collecting on the debt. By way of example, if a motion to lift the automatic stay is granted for a bank who holds the mortgage to your house, the bank will be allowed to initiate a foreclosure action against you. If you fear this may happen, give us a call and we can discuss your options.
The thought of filing for bankruptcy can be overwhelming. If you are concerned about what might happen next, give the MN Bankruptcy Attorneys at Kain & Scott a call. We will discuss your options and help take some of the stress away. At the end of the day, getting your life back is what matters most to us. If filing for bankruptcy is the best option for you, we will let you know. If you’re tired of having debt control your life, let us help you get your life back.
Compare the advantages and disadvantages of bankruptcy.
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- Sue L.
“I went to google to check out some attorney's in the Mpls area and the first office that came up was Kain & Scott. I checked out their website and I was sold on them right away! I was very impressed with what I read about them and the people who worked for them.”
“If you, or somebody you know, is considering filing for bankruptcy, do yourself a favor, don't bother contacting just any law firm. Contact Kain & Scott! They will make you feel more relaxed and less stressed than you've felt in a LONG time! THEY HAVE YOUR BEST INTEREST because THEY CARE ABOUT YOU. Call them or email them. You will NOT be sorry.”
- Justin T.
“Kain & Scott PA is the nicest law firm they don’t judge and have amazing people to answer the phones and be patient with clients like us Megan Rockenbach is such a good listener and very kind on the phone.”
- Ceairra B.
“Everyone in the office is extremely helpful and nice!”
- Miranda M.
“These are very kind and helpful people who take the stigma out of bankruptcy and treated me like I wanted to be treated. They understand good people sometimes have hard times. Wes Scott and his team are so nice! Stephanie Buerger has been a savior and responds to my email or phone call questions the same day. It feels like small town service with big city talent and reputation!”
- John S.
“They live up to their motto of being the friendliest lawyers around. The welcome receptionist comes around to greet you and leads you to a private room furnished with snacks and drinks. There is a massage chair in the room and your name is on a sign welcoming you personally to the private space.”
- Brother S.
“There are no better bankruptcy attorneys in MN - from the initial conversation to working with Veronica on payments, there are no finer people to help you get your life on track. Bankruptcy can be a terrifying thing, but Kain and Scott absolutely have your back.”
- Andrew K.
“After doing a bunch of internet research for Bankruptcy Attorneys, Kain & Scott PA overshadowed all others I had looked at. If you are not sure what to do, which option is best or who to choose, please call Kain & Scott. They will listen to your situation and tell you what your best option would be. Again call Kain & Scott, you will be glad you did! I know I am!!”
- Tammy E.
“I am not one to ever right a review, but with how wonderful Kain & Scott are I just have to let other people know. I would most definitely recommend them to my family, friends, or a colleague who is looking at filing bankruptcy.”
- Jessica A.
“Kain and Scott is the BEST!! Margaret H. helped me out a great deal when I was going through my hardship! I really love the fact that all the staff including Lindsay B. was kind enough to answer some personal questions that I had along the way. I wouldn't choose another company to work with! Thank you everyone who made my journey as a BREEZE! Now I would like to include Stephanie V. Buerger for congratulating me on my journey stepping forward to a debt free life! Stephanie Googins has done a great job providing me with additional information after the bankruptcy proc”ess!
- Gina S.
“I highly recommend this firm as well as recommending bankruptcy! Times have changed and it's not a big deal like it may have once been or how old people talk about it. It's truly a new beginning. This has made my life so much simpler. Exactly what I needed heading into a divorce. I can't thank these guys enough!! ”
- Mandy B.
“The process was so easy, this firm does all of the work for you and really works for you. They are great in responding to any questions you may have. I would recommend this firm to anyone who is struggling with debt. They are also very cost effective, and will work with you for payment arrangements. We couldn't be more satisfied! Debt free finally!”
- Katie B.
“All I can say is wow! From the moment I walked in the door I felt welcome and better right away! Everyone one treated me like me like my story actually mattered! I worked with Misty Myers and she was such an amazing person to work with! She made things so easy and just took charge right away with trying to help! I highly recommend Kain and Scott! I couldn't be happier with how I was treated!”
- Dustin S
“Even from the first conversation I had on the phone regarding their services, I knew I was going to choose them. I made an appointment for the following week and was welcomed with no judgement. The whole process was fast and efficient. I worked personally with Misty, Samantha, and Callie but everyone there was extremely helpful when I had questions. There was little to no paperwork and they did most of the work for me. My only regret was not filing sooner!”
- Megan W.
“The staff at Kain & Scott were amazing! They make you feel very comfortable from the first time you step in the door. Everything is well organized and they respond quickly to any questions you have. Shout out to Wes, Calli, Megan, Sarah, and Lindsey you all were great in helping me get my life back. Keep up the good work!!”
- Toby A.
“I have to say I have had the greatest experience filing bankruptcy with Kain&Scott. Kelsey B Quarburg and Jesse A Horoshak were two of the most professional attorneys I have ever worked with. Jesse showed up at my 341 meeting totally prepared. Other attorneys along with their clients weren't. Jesse and I weren’t called up first, so I had the privilege of seeing how this meeting would work. The first two clients and attorneys weren’t prepared at all, they were told by the federal trustees,that they were missing paperwork and information. It took these two clients and attorneys 20 minutes each to get through the process. Jesse had 1 client he was representing before me. The process was flawless, 5 minutes and the process was complete. My meeting took 5 minutes. It proved to me choosing the best law firm matters. Kelsey B Quarburg is the best. She was very professional yet she was also human. She would respond to my emails at odd times of the day and night. She kept me informed every step of the way. Thank you both. Thank you Callie for making sure my paperwork was forwarded and up to date. What a team. Thank you all so much for a job well done ,and I mean this from the bottom of my heart. Once again thank you all,for giving my life back. GOD BLESS YOU ALL ”
- Maurice W.
“Stellar customer service and you have the “how can I help you” staff! You made my future easier to handle and I have so much more confidence especially with your staff behind me. I appreciate all your help and time you spend helping me address my credit. ”
- Nancy N.
“I am very fortunate to have found Kain & Scott. They made my experience fast, friendly and trustworthy. Thank you to Megan R. for being flexible with payment arrangements and really understanding what other people may be going through and how to do what is best for them. 😊 Thank you to Stephanie Buerger as well,for being very welcoming and easy to work with during my initial info gathering. Thank you gals for making my experience a low stress to the point “filer friendly” experience. ”
- Scott K.