You may find yourself asking, “What is bankruptcy? And what can it do for me?” Well the short answer is, a lot. From the moment the bankruptcy petition is filed it sets into action a legal chain of events that is unlike any other type of law. On the date a case is filed, the debtor obtains an automatic stay, which prohibits creditors from continuing collection attempts without receiving court permission first.
This means foreclosures, repossessions and lawsuits generally are stopped at the time the case is filed.
This does not mean that a creditor cannot continue to seek repossession and foreclosure, but it must seek permission from the bankruptcy court first. For example, if a debtor files for Chapter 13 bankruptcy relief and fails to keep making regular post-petition (after- filing) payments, then the creditor may ask the court to let it resume collection. The stay does not halt all domestic actions either, especially in Chapter 7 cases. It is important that you consult an attorney skilled in domestic issues in bankruptcy if you are in this situation. If you receive a notice as a creditor of a bankruptcy and you believe you are owed money, then the best thing can do is to consult an attorney certified in bankruptcy and debtor-creditor law. Bankruptcy attorney rates are generally more affordable than other attorneys and you may have more options than you think.