Bankruptcy Protection in Santa Ana - Thomas K. McKnight LLP
What Does Bankruptcy Protection Mean?
What does Bankruptcy Protection actually mean? What does bankruptcy protection actually protect for the common individual?
When you read a press release about a business or individual filing for bankruptcy, it is common to see the expression "... has declared bankruptcy and is reorganizing under bankruptcy protection" or "... has filed for Chapter 7 bankruptcy protection". The term Bankruptcy Protection is used because a bankruptcy filing in a court of law stops all collections activity and legal proceedings relating to debt and financial issues. All bankruptcy filings involving Chapter 7 and Chapter 13 will place an Automatic Stay on the bankruptcy estate.
The automatic stay stops the commencement, enforcement or appeal of actions and judgments, judicial or administrative, against a debtor for the collection of a claim created prior to the filing of the bankruptcy request. The automatic stay additionally restricts collection actions and proceedings directed toward property of the bankruptcy estate. What does this imply for you? Basically, a bankruptcy filing uses an automatic stay that will not permit your creditors to move forward with a judgement to collect their debts from your accounts or earnings. When you are under bankruptcy protection, each of your assets are protected until the bankruptcy is over. It is a common misconception that if you declare bankruptcy, you will lose everything you own. It is more likely that your assets will be protected under exceptions in the bankruptcy code that allow you to keep items you need to live. Without bankruptcy protection, your assets might be in danger of being lost to your lenders through lawsuits and judgements. A court of law does not examine your circumstance before a judgement is decided. You can stop the entire procedure by letting the courts know that you do not have the resources to pay all your debts. Filing for bankruptcy is the best way to protect your assets and let the courts know that you have to protect the things you own and can not pay the debts you presently owe.