What Happens After Filing For Bankruptcy

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What Happens After Filing For Bankruptcy


When a person files for bankruptcy, an automatic stay goes into effect, which stops all threatening letters asking for debts to be repaid. It should come as a great relief to those who are unable to pay their bills. Bankruptcy attorney Benjamin Ginter runs the Law Offices of Benjamin J. Ginter in Cranford, New Jersey. Here, he talks about what’s involved in bankruptcy.

Automatic Stay

An automatic stay goes into effect after your filing. Then any collection attempt from creditors should stop immediately, including calling the debtor, sending letters to the debtor asking for debt repayment, trying to foreclose on a property, suing the debtor, garnishing the debtor’s wages, or levying the debtor’s bank accounts. All collection proceedings should stop as well.

If any of these attempts does happen, you or your attorney should notify the creditors that you have filed for bankruptcy. If they keep trying to collect, you have the option of suing them in court for violating a court order.

Once the case moves forward, the debts that the creditors are trying to collect will often be wiped out. Lawsuits that are filed are usually terminated, and levies are released if you have a successful bankruptcy. Foreclosures are stopped and threatening letters cease.

Secured Debt

If you have secured debts such as a mortgage, or you are financing a car, the secured creditors are not allowed to collect the debt from you while you are in bankruptcy. However, if you want to retain the property, for example, to keep the car or to keep the home, you have to make provisions to continue paying for these secured debts, such as car or mortgage payments.

If you don’t want to do that, the secured creditors will file a motion to lift the automatic stay and ask the court for permission to continue with the collection proceedings. They could then repossess the car and foreclose on the house if you don’t pay the debts.  

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