What does “Automatic Stay” mean in Bankruptcy?
Upon filing of a Bankruptcy petition, creditors, including tax collectors, are prohibited from any attempts to collect from you because “Automatic Stay” is in effect. This means, creditor calls, repossession, foreclosure, lawsuit (with some exceptions), and other collection efforts must stop immediately. Automatic stay does not stop actions in marital dissolution proceeding to establish, modify or enforce child or spousal support, custody and visitation, criminal proceeding by the state or federal government, and actions where debtor is the plaintiff or moving party.
If creditor harassment or lawsuit that do not fall under the exception continues despite your bankruptcy filing, call Muoi Chea Sacramento Bankruptcy Attorney in Sacramento, Stockton, or Fairfield, California Office immediately to enforce the automatic stay under the bankruptcy codes. Do not tell the creditors anything other than your bankruptcy case number, date of filing, and bankruptcy chapter.
Automatic stay does not last forever. You would not file a Chapter 7 Bankruptcy if your intention is to keep your car or home. You would file a Chapter 13 Bankruptcy instead.
What does Discharge of Debt Mean in Bankruptcy?
When the Sacramento Bankruptcy Court or Modesto Bankruptcy Court grants you a discharge, it means that your creditors cannot collect your debt from you personally. Once you received a bankruptcy discharge, your creditors have to stop wage garnishment, bank levy, phone calls, threatening letters, lawsuits and other attempts to collect on the discharged debts.
However, there are debts that are nondischargeable like child support, alimony, student loans (if you cannot prove “undue burden”), recent taxes, intentional torts, damages caused by DUI, debt due to fraud, etc.
A discharge does not eliminate car loan or mortgages if you plan to keep the collateral. However, if you qualify, a Chapter 13 Bankruptcy lienstrip can remove second mortgages or equity line of credit or a Chapter 13 Bankruptcy can cram down or reduce the balance owed to your car loan to the retail value of your car.
What does Exempt Property Mean in Bankruptcy?
Property that is exempt is removed from the bankruptcy estate and cannot be used to pay debts owed to creditors. What properties are exempt are determined by the California Code of Civil Procedure. The purpose of exemptions is to allow you to keep some assets after bankruptcy in order for you to have a fresh start. However, at the same time, you need to balance the rights of creditors.
If you are filing Chapter 7 Bankruptcy (aka liquidation), you want to make sure your properties are exempt; otherwise, the Chapter 7 Trustee will try to liquidate the nonexempt properties to pay your creditors. If you have properties that are not exempt by the California Code of Civil Procedure, you should consider filing a Chapter 13 Bankruptcy.