Thomas K. McKnight - Bankruptcy Protection in Orange County, California
What Does Bankruptcy Protection Mean?
What does Bankruptcy Protection really mean? What does bankruptcy protection actually protect for the common consumer?
When you read a press release about a company 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 regarding 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 also restricts 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 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 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 can be in danger of being lost to your lenders with lawsuits and judgements. A court of law does not assess 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 best way to protect your assets and let the courts know that you need to protect the things you own and can not pay the debts you presently owe.
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