A common question people ask who are being bombarded by collectors is whether filing bankruptcy stops all collection actions. According to The Gil Law Firm in Dothan, AL, the answer is yes. By filing either chapter 13 bankruptcy or chapter 7 bankruptcy, you are basically applying the brakes on all collection activities.
The law firm explains that when any type of bankruptcy is filed, The 11 U.S. Code § 362 - Automatic Stay goes in effect. The court issues an order to creditors and collection agencies to cease common tactics used for recovering debt, including:
- Harassing phone calls
- Controlling properties or estates
- Enforcing wage garnishments
There are exemptions, however. For example, a secured creditor can still take control of some or all of your property. A bankruptcy attorney at The Gil Law Firm will help distinguish what exactly you’re standing to lose or gain by filing either a chapter 7 or chapter 13 bankruptcy.
An automatic stay is limited if you’re a repeat filer. If you’ve filed for bankruptcy within the last year, this ending of collection activities will only remain in effect for 30 days.
Moreover, a bankruptcy does not stop debtors from meeting their financial obligations, since a repayment plan will need to be made when filing a chapter 13 bankruptcy. If you file chapter 7 bankruptcy, then debtors will need to liquidate your assets in order to compensate for part or all of the debts owed.
To learn more about whether filing bankruptcy is right for you, call The Gil Law Firm at (334) 673-0100.