Khan Law
Khan Law

What Happens To Your Possessions After Bankruptcy

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Automatic Stay

Automatic Stay is an order that prevents creditors from taking certain actions against debtors during Bankruptcy proceedings.  Once you file bankruptcy, your creditors will be notified of your filing, and the Automatic Stay comes into play.  This will STOP creditors from attempting to collect debts against the debtor during the relief process.  If creditors fail to follow the guidelines of the Automatic Stay, they may face a penalty.

Home Foreclosure

Once your Bankruptcy Petition has been filed, mortgage companies, or whichever financial institution holds your mortgage, are no longer able to foreclose on your property. This does not mean that your house will be taken out of foreclosure, it just stops the process and buys you some time. It allows allows you to work with the mortgage company on other ways to catch up on your mortgage.

Creditor Calls

When you are behind on paying creditors, they call you, your workplace or friends or family repeatedly. The filing of your bankruptcy and the Automatic Stay prevents creditors from making these calls to you or anyone you know. Many debtors state that as soon as they file for bankruptcy, the creditor calls stop within 1-2 days.

Vehicle Repossessions

The Automatic Stay prevents your car from being repossessed if you are behind on payment to the vehicle finance company. It buys you some time to decide the next step on what to do with your vehicle. If you no longer want your vehicle, the Bankruptcy will allow you to surrender your vehicle back to the finance company and discharge the entire claim amount. If you want to keep your car, the vehicle finance company may allow you to catch up on payments through a Reaffirmation Agreement. Finally, a Chapter 13 bankruptcy would also stop the vehicle repossession and make monthly payments to the Trustee who then disburses the monthly amount to your vehicle finance company. Either way, the Bankruptcy buys you some time.

Wage Garnishment or Bank Levy

After a creditor has obtained a judgment against you for not making payments, they will generally request the Court issue an Earnings Withholding Order (i.e. wage garnishment) or Bank Levy.  With a wage garnishment, the Court orders your employer to keep a portion of your regular paycheck, which they will give to your creditors directly.  On the other hand, a bank levy occurs directly between your bank and the creditor.  Creditors first must receive a money judgment from the Court and become a “judgment creditor.”  Once the Court has given them the authority to do so, creditors may contact your bank to withdraw money from your account.

Once you receive a Wage Garnishment Order, you have a short period of time before they begin garnishment of your paycheck. Usually, it will occur at the next pay period. Its imperative you contact a Bankruptcy Attorney so you can determine if you qualify for bankruptcy. The bankruptcy filing will trigger the Automatic Stay and your employer CANNOT garnish your wages. Our office is very experienced in filing petitions quickly to prevent any garnishment of your paycheck.

Eviction

If you are renting your current apartment or home and have not been making payments on time, you may face eviction from your landlord.  When filing for Bankruptcy, the Automatic Stay will allow for the eviction process to be delayed.  However, the effects of the Automatic Stay are determined by whether or not you had already begun your Bankruptcy filing when your landlord received a Judgement for the residence.

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