Two people filing jointly for Chapter 7 bankruptcy are entitled to equal protection under federal bankruptcy laws -- including the automatic stay. Married couples and individuals are eligible for Chapter 7; unmarried individuals cannot file jointly. The automatic stay is a major reason why some couples file for bankruptcy. The stay is a legal injunction signed by a judge and is granted to everyone filing for bankruptcy. The stay immediately halts lawsuits and all debt collection, including bank and wage garnishment.
Short Wait
People filing jointly for Chapter 7 bankruptcy won't need the automatic stay for long. That is because Chapter 7 is the fastest of all bankruptcy types. The courts resolve Chapter 7 cases in as little as three or four months. Unsecured debt, such as credit cards, is completely eliminated in Chapter 7 following a possible liquidation of assets. Many assets are exempt from the process, however, and some people lose nothing. Assets at risk in Chapter 7 include large amounts of cash, expensive artwork or vacation homes. Primary residences and cars under a certain value are usually protected.
Dismissal
The automatic stay remains until the bankruptcy is discharged, or completed. At that point there isn't a need for protection because the bankruptcy has addressed all the couple's debts. However, a dismissal of the bankruptcy petition before discharge causes a lifting of the automatic stay. The bankruptcy judge can dismiss a bankruptcy case for procedural errors, such as failing to list all assets and debts on the application. Creditors can resume all debt collection efforts -- including bank and wage garnishment -- if the automatic stay is lifted.
Alternatives
There are several alternatives to bankruptcy -- including debt settlement -- but none offers protection similar to the automatic stay. However, there are some loopholes in the automatic stay. For example, a couple living in an apartment is protected from eviction by the automatic stay, but only temporarily. The landlord will petition the court to allow eviction if the couple cannot or will not pay the rent. The same is true for foreclosure situations and repossession of secured debts such as automobiles.
Advice
Couples uncertain about protection under Chapter 7 should visit a few bankruptcy attorneys. Initial consultations are usually free. Visiting two or three attorneys allows the couple to ask more questions and gain a clearer understanding of the Chapter 7 process. Nonprofit credit counselors can also answer questions during free consultations. Referrals for credit counselors are available from charities such as the United Way.
0 comments:
Post a Comment