Waukegan Bankruptcy Attorney Describes How Chapter 13 Stops Collecti...

As stated by Waukegan Bankruptcy Attorney, David Siegel, Chapter 13 will stop collection proceedings.  Once a Chapter 13 Bankruptcy case is filed, there is the creation of the automatic stay.  The automatic stay is basically a stop sign or a roadblock that goes up that prevents creditors from collecting upon you.  The automatic stay happens immediately after the case is filed, and a notice can be drafted by your attorney, called the automatic stay, which can then be sent to all the creditors, in addition to the notice that all the creditors are going to get from the clerk of the U.S. Bankruptcy Court.  

The beauty of the automatic stay is that it can be faxed or emailed immediately to a creditor to stop collection efforts dead in their tracks.  The best-case scenario is when a share sale is pending on your real estate and the automatic stay is sent to the mortgage company, which effectively stops a share sale right on point.  Additionally, if you’re someone who is possibly going to have your car repossessed, then the automatic stay prevents that car from being repossessed.  There is also case law out there that says if the vehicle was repossessed but not yet sold, the filing of the bankruptcy creates the automatic stay, and case law – the Thompson Case – states that that vehicle must be returned to the debtor.  

So, Chapter 13, much like Chapter 7, has the power of the automatic stay to stop collection efforts.  If your wages are being garnished, the filing of a Chapter 13 bankruptcy case will immediately stop any future garnishment.  Additionally, if your bank account is frozen and the money has not yet been turned over to the creditor, then the filing of the Chapter 13 and the creation of the automatic stay will prevent that money from being sent to the creditor.  The way it works is, as long as you file your case prior to the turnover date, then the creditor must release the lien on your frozen bank account, and your bank will be mandated and directed to return those funds to you.   Additionally, the creditor does not want to collect or receive any funds after your case has been filed, as this may be held to be violation of the automatic stay.  

So, filing a Chapter a Chapter 13 Bankruptcy case creates immediate protection.  It stops collections immediately.  It helps stop a foreclosure from continuing, and it helps a repossession from occurring.  Contact your local bankruptcy attorney who handles Chapter 13 to learn more about your particular rights under Chapter 13 of the bankruptcy code.