How Bankruptcy Could Save Your Home or Car

The new bankruptcy law which took effect in 2005 has made filing bankruptcy a more difficult and complex process. However, with the right legal help, the bankruptcy code contains powerful protections for you. Maxwell Attorneys LLC are ready to help residents of Southeastern Wisconsin learn what protections are applicable to them.

If you are having difficulty making payments to credit cards, medical bills, or you are behind in your mortgage or car payments, bankruptcy may be the protection you need and the fresh start that you deserve.

The formal bankruptcy process starts with a Bankruptcy Judge entering an Order which immediately protects you from actions by creditors against you. All legal action or collection activity against you must immediately stop. This Order, which is most commonly referred to as the “automatic stay”, remains a powerful protection upon your filing of a bankruptcy case, despite the creditor industry’s efforts to make it harder to file bankruptcy in the new bankruptcy law.

Although the new bankruptcy law may limit the protection of the automatic stay in some limited circumstances, most of the time when you file for bankruptcy relief creditors must stop attempting to collect from you. They can not continue to call you or send you collection letters. The automatic stay makes it illegal for your creditors to contact you after you file bankruptcy. The automatic stay will stop any lawsuit filed against you and almost every other action against you, your property and your paycheck.

We use the automatic stay to help our clients who are facing an emergency financial crisis, like:

Foreclosure: If your home is in foreclosure, the automatic stay will stop the foreclosure action. Chapter 13 is your best bankruptcy option to save your home from foreclosure. Ordinarily, you can file a Chapter 13 to save your home anytime prior to the state court’s confirmation of the forced sale (sheriff’s sale) of your home.

Car Repossession: Once bankruptcy is filed, you can stop worrying about the repo man coming to take your car. If you want to keep your financed vehicle, you must continue to make your car payments after you file for Chapter 7 bankruptcy. If you are behind on your payments, you may be able to use a Chapter 13 bankruptcy to help get caught up on your payments and keep your car. If you filed Chapter 13, you must make all of your trustee payments or the car creditor can ask the judge to “lift the stay” so they can lawfully repossess your car.

Lawsuits/Garnishments: Filing bankruptcy stops lawsuits and wage garnishments immediately. The automatic stay protects your pay check from creditors. You will likely be able to wipe out the debt that you were being garnished for and start again to take home a full pay check.

Utility shut-offs: Filing bankruptcy can prevent a utility company from disconnecting your electric or gas service. If your utilities have already been disconnected, the automatic stay will force the utility company to reconnect your service.

Tax Levies: Getting the protection of the automatic stay will stop the IRS from issuing a tax levy or seizing your property. Depending on how long your tax debt has been outstanding, it may be eligible for discharge in the bankruptcy. The automatic stay does not prevent the IRS from auditing you, demanding you file your tax returns, assessing you a tax liability or demanding you pay the assessment.

As powerful as the automatic stay is in bankruptcy, it will not stop any of the following:

Criminal Proceedings: The automatic stay will not stop a criminal action. In particular, if you are charged with driving under the influence, bankruptcy will not stop the state from prosecuting you. Bankruptcy may help erase debts associated with criminal activity if a criminal action can be separated into distinct criminal and civil liabilities.

Domestic Support Actions: The automatic stay will not stop a lawsuit against you seeking to establish paternity or to establish, modify, or collect child support or maintenance.

The automatic stay will remain in effect until:

• You complete the bankruptcy and receive a discharge of your debts, or;

• The bankruptcy judge lifts the stay at the request of the creditor, or;

• The property you want to protect is no longer part of the bankruptcy estate.

The new bankruptcy laws are complex and you need to seek experience legal counsel to understand how these new laws affect your particular situation. Our attorneys serve individuals and small business owners throughout the Southeastern Wisconsin counties of: Milwaukee, Waukesha, Ozaukee, Washington, Kenosha, Racine and Walworth.

Please contact an attorney at Maxwell Attorneys LLC at 414-727-0123 to schedule a free initial consultation. Or, complete our secure online contact form, and an attorney will follow up with you promptly.