How an Emergency Bankruptcy Can Save Your Assets

Many people who are behind on payments for their vehicles or on their mortgages know that they can’t keep missing payments without their creditors taking action at some point. These actions typically start with creditors’ efforts to collect missing payments with phone calls, letters and other attempts. If the missed payments can’t be collected, creditors will eventually turn toward taking back the related asset. To accomplish this, creditors can repossess a vehicle or foreclose on a home.

Emergency Bankruptcy and Automatic Stay

Even though repossession or a foreclosure may not come as a surprise, once the wheels are in motion either action can occur suddenly. It is in these types of situations where an emergency bankruptcy can be put into action to save these assets. In cases where the taking back of an asset is imminent, the bankruptcy court can allow an emergency bankruptcy filing to enable a filer to be protected by the automatic stay which goes into effect as soon as the bankruptcy petition is filed.

Due to time being short and the necessity of getting an emergency bankruptcy done correctly the first time, hiring an experienced bankruptcy attorney to guide this process is advisable. In an emergency bankruptcy filing, the court will allow the bankruptcy petition to be filed without all of the documents normally required to start the bankruptcy process. Instead, the court will grant a period of time, usually anywhere from 48 hours to two weeks, for the filer to present the required supporting documentation.

Immediately Stop Collection Efforts and Repossession

The automatic stay, which is put in place by the emergency bankruptcy filing, ceases any and all collection efforts by creditors including collection calls, vehicle repossessions and foreclosure proceedings. This stoppage of collection processes allows people to stay in their homes and keep their vehicles while the ensuing bankruptcy proceedings unfold.

Due to the different outcomes of each type of bankruptcy filing, people trying to keep their cars and/or their homes should retain the services of a bankruptcy attorney to ensure that they get their desired results. While both Chapter 7 and Chapter 13 bankruptcy filings start by protecting assets with an automatic stay, the end result of these bankruptcies are quite different and may dictate whether assets can be retained by the filer or forfeited back to creditors.

Bankruptcy Options

The biggest benefit of a Chapter 7 bankruptcy is that unsecured balances owed to creditors are discharged by the court, freeing the filer from any further payment obligations. Missed payments on secured balances on assets such vehicles or a home musty be brought current shortly after the completion of the bankruptcy process. For filers hoping to retain these assets, a Chapter 7 may not prove to be the best choice due to the fact that that if payments are not brought current, creditors can resume repossession and foreclosure efforts.

A Chapter 13, on the other hand, results in a court approved payment plan for payments owed to creditors. Payments plans usually last about five years and are based on the filer’s monthly disposable income. As long as payments are made through completion of the payment schedule, assets can be retained by the filer.

Anyone considering an emergency bankruptcy should seek guidance from an experienced bankruptcy attorney to ensure that the process yields the best results possible. If you are facing an imminent repossession and/or a foreclosure, the attorneys at Zhou & Chini can help you get an automatic stay to protect your assets. For a free consultation, visit zhouchinilaw.com or call (800) 972 9600.