What does Bankruptcy Protection actually mean? What does bankruptcy protection really protect for the average individual?
When you read a press release about a company 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 concerning debt and financial matters. All bankruptcy filings including 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 petition. The automatic stay additionally prohibits 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 allow your creditors to proceed with a judgement 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 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 things you need to live. Without bankruptcy protection, your assets may be in danger of being lost to your lenders through lawsuits and judgements. A court of law does not inspect your situation before a judgement is decided. You can stop the whole procedure by letting the courts know that you do not have the resources to pay off all your debts. Filing a bankruptcy is the most effective 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 a Bankruptcy Protection Lawyer in Santa Ana, California, contact Thomas K. McKnight LLP at (800) 466-7507 or visit our website at TKMLLP.Com for a free consultation!