Filing a bankruptcy gives the consumer certain rights under law. They're there expressly for the purpose of protecting the filer from collection activities and provide for personal asset exemptions. The spirit of the law is to give the consumer a period of time in which to organize themselves and make important decisions.
The Automatic Stay During Bankruptcy
The term "automatic stay" is shorthand for no collection activity whatsoever during the bankruptcy. It applies to homes, vehicles and any other items that have been purchased with a loan as well as unsecured debts like credit cards. There can be no foreclosure or repossession during the filing period unless it's voluntary. Ultimately the court will decide to discharge some or all of the debts, but before that decision is made, creditors cannot contact the filer under any circumstance. Be sure that schedules D through F are filled out completely with all creditors listed. And do not overlook any entity that's owed money as this is important to ensuring the success of the automatic stay.
Why It's Important To List Every Creditor
One of the services provided by the court is an official mailing to all of your listed creditors. The notices are of a legal nature, explaining that the creditor has been listed in the bankruptcy and that all attempts to collect the debt must cease. A creditor can be added after the filing but before discharge. Ultimately it's best to avoid extra work by doing it all in the beginning.
When A Debt Collector Violates The Automatic Stay
A willful violation of the automatic stay by the creditor can be considered an actionable offense. It enables the consumer to commence a lawsuit against the collection agency for damages. This is only usable in the situation where the attempts to collect are aggressive and harassing. One or two phone calls that happen within the first two weeks post-filing are most likely to be let go as the collector may have not yet received notice.
The Right To Exempt Personal Property
Bankruptcy can require liquidation of assets in order to satisfy outstanding debts. You may own certain items that have no real value to anyone but yourself, or you may own something of value that you absolutely want to keep. For example, you own a car that has no value to anyone but yourself and was paid off years ago. Find the lowest resale value through auto wreckers or auctioneers and ask them for paperwork to back up the valuation. Enter the amount at the appropriate line on schedule C with the corresponding code that allows for the exemption.
You must be careful when going through the exemptions. States can disallow the use of the Federal exemption standards, which means that you must use the state exemption codes. Only a handful of states will allow the consumer to have a choice between Federal and state.
Protecting Your Rights During Bankruptcy
The best way to ensure your consumer rights is to hire a lawyer who specializes in bankruptcy law. They will also know and advise you of your rights when filing for bankruptcy. Going through the courts is a very involved process with potential hazards along the way. A bankruptcy attorney will work on your behalf and prevent any entity from trying to trample over your rights as well as help you legally keep certain possessions. If you have a complicated case with many different assets, don't think twice about hiring a lawyer.
