What Does Bankruptcy Protection Mean?
When you read a press release about a business or person filing for bankruptcy, it is common to see the phrase "... 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 concerning debt and financial matters. 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 before the filing of the bankruptcy application. The automatic stay additionally prohibits collection actions and proceedings directed toward property of the bankruptcy estate. What does this mean for you? Basically, a bankruptcy filing uses an automatic stay that will not allow your creditors to proceed with a judgment to collect their debts from your accounts or income. 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 retain items you need to live. Without bankruptcy protection, your assets may be in danger of being lost to your lenders with lawsuits and judgements. A court of law does not inspect your circumstance before a judgment is determined. You can stop the whole process by letting the courts know that you don't have the resources to pay off 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 presently owe.
For more information about Bankruptcy Protection in Westminster, California, contact Thomas K. McKnight LLP at (800) 466-7507 or visit our website at TKMLLP.Com for a free consultation!