What Does Bankruptcy Protection Mean?
When you read a press release regarding a business or person 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 regarding 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 made before the filing of the bankruptcy application. The automatic stay also prohibits collection actions and proceedings directed toward property of the bankruptcy estate. What does this mean for you? Basically, a bankruptcy filing applies an automatic stay that will not allow your creditors to proceed with a judgment to collect their debts from your accounts or wages. When you are under bankruptcy protection, all of your assets are protected until the bankruptcy is over. It is a common misunderstanding that if you declare bankruptcy, you will lose everything you own. It is more likely that your assets will be protected under exemptions in the bankruptcy code that allow you to keep things you need to live. Without bankruptcy protection, your assets might be in danger of being lost to your creditors with lawsuits and judgements. A court of law does not inspect your situation before a judgment is determined. You can stop the entire procedure by letting the courts know that you don't have the resources to pay all your debts. Filing a 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 currently owe.
For More Information About Bankruptcy Protection in Los Angeles, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!