Yes, filing chapter 13 bankruptcy can stop certain debt collecting attempts. Chapter 13 is one of two personal bankruptcy options which provide people with a way to re-organize their debts through what is known as a repayment plan. The repayment plan indicates how long and how much money will pay the bankruptcy court. Typically, in three to five years chapter 13 bankruptcy cases are completed and successful discharged on all the payments are made.
An Automatic Stay Provides People With Legal Protection Against Debt Collecting
An automatic stay is part of the bankruptcy law provision that prohibits creditors from pursuing debt collecting activities. The automatic stay remains in place for throughout the chapter 13. In other words, as long as people are making bankruptcy payment to the bankruptcy trustees and any required payments to creditors such as mortgage payments, creditors can’t do anything.
The Automatic Stay Can Stop Lawsuits, Judgments and Wage Garnishments
There are many debt collecting activities an automatic stay can prevent. For instance, creditors such as credit card companies and payday loans must stop pursuing lawsuits against individuals once the chapter 13 cases are filed. If people have been sued and creditors receive judgments, the automatic stay can help. Wage garnishment, which is a legal process that allows creditors to take money out of people’s paychecks, is also stopped. This means whether creditors threaten to garnish wages or are garnishing wages, they must cease the debt collecting.
The Automatic Stay Stops Overpayment Debt Collections
Government agencies which offer public benefits such as public assistance and food stamps can start debt collecting activities against people who were overpaid. In other words, the agencies can collect the amount of overpayment out of future checks, according to Nolo. However, the automatic stay prevents all debt collection attempts by the agencies. Thus, people can repay these agencies during their chapter 13 bankruptcy cases than having the money taken out of their checks. The stay won’t stop agencies from deeming people ineligible for future benefits.
Obtain Legal Help About Bankruptcy
For people interested in filing for chapter 13, they should contact bankruptcy lawyers. The lawyers will go over people’s financial situation and determine whether they’re eligible for chapter 13. Also, if creditors have foreclosed on homes, bankruptcy lawyers can file immediate chapter 13 cases to stop them from taking the homes.
