Two very important terms that an individual should understand before they file for bankruptcy relief is automatic stay and bankruptcy discharge. These bankruptcy terms explain two of the most important protections offered by the Bankruptcy Code. Our Jacksonville bankruptcy attorney discusses these bankruptcy terms and other bankruptcy matters in this article.
If you have additional questions after reading the article, please call The Law Offices of Justin McMurray, P.A. at 904-248-4482 to schedule a free consultationwith a bankruptcy attorney in Jacksonville to discuss your specific financial situation.
Highlights from the article:
- Why is the automatic stay important for a debtor in bankruptcy?
- When do I receive my bankruptcy discharge in Chapter 7 and Chapter 13 cases?
- Reasons Why A Bankruptcy Filing May Be the Best Debt Relief Option
Why is the automatic stay important for a debtor in bankruptcy?
When you file a Chapter 7 or Chapter 13 bankruptcy petition, an automatic stay goes into effect immediately. The automatic stay prevents creditors from taking certain actions to collect a debt. For instance, the automatic stay prevents creditors from filing or continue a foreclosure or repossession. The automatic stay stops wage garnishments and levies. As long as the stay remains in effect, creditors cannot take any actions to collect debts, including calling a debtor to demand payment of a debt.
In most cases, the automatic stay remains in effect throughout the entire bankruptcy case. However, there are a few instances in which the automatic stay may be modified or lifted.
For instance, if you stop paying your mortgage loan payments, the mortgage lender may file a motion requesting a modification of the automatic stay as to its debt so that it can proceed with a foreclosure action. If you have filed previous bankruptcy cases within a short time that were dismissed, the automatic stay may not go into effect or may only remain in effect for a short time.
For many debtors, the automatic stay protects them from creditor harassment and collection efforts until they receive their bankruptcy discharge.
When do I receive my bankruptcy discharge in Chapter 7 and Chapter 13 cases?
A bankruptcy discharge releases the debtor from any legal liability for a discharged debt. Creditors cannot take any actions to collect a discharged debt. Therefore, the bankruptcy discharge continues the protections against debt collection after a bankruptcy case is completed that the automatic stay provided during the bankruptcy case.
The bankruptcy court typically grants the bankruptcy discharge at the end of the bankruptcy case. In a Chapter 7 case, the bankruptcy discharge is issued after the expiration of the deadline to file objections to discharge or motions to dismiss for substantial abuse. This deadline is typically about four months after the filing date of the Chapter 7 petition. In a Chapter 13 case, the debtor must complete the bankruptcy repayment plan before a discharge is granted. Chapter 13 plans are usually 36 to 60 months in length.
In both bankruptcy chapters, the debtor must complete the Debtor Education Course before a bankruptcy discharge may be granted. If the debtor fails to complete the course and file the certificate of completion before the deadline, the court denies the bankruptcy discharge. A denial of discharge allows creditors to resume all legal actions to collect debts.
Reasons Why A Bankruptcy Filing May Be the Best Debt Relief Option
Individuals and couples file for bankruptcy relief for a variety of reasons. In most cases, the person or family has experienced a financial hardship caused by one or more life events. Some of the reasons why a person may file Chapter 7 or Chapter 13 include:
- Unemployment or permanent reduction in income
- Disability or impairment
- Death of a spouse or other family member
- Illness or accidental injury
- Divorce or legal separation
- Student loan debt, tax debt, or credit card debt
- Foreclosure, repossession, personal judgments, or debt collection lawsuits
- Business debts
In some cases, the reason for filing a bankruptcy case is a lack of money management skills or abuse of credit cards and other debt. Fortunately, the bankruptcy court does not judge a person or administer a case based on the reason why the debtor needs to seek bankruptcy assistance. Bankruptcy relief is open for all individuals who need debt relief, provided the bankruptcy filing is made in good faith and without fraud.
By filing a Chapter 7 or Chapter 13 bankruptcy case, you can get rid of debts so that you can recover from a financial crisis and move forward. The bankruptcy case helps protect property and income you need to rebuild your financial stability while giving you relief from overwhelming debts. A bankruptcy case can be the most affordable, effective, and timely option for getting out of debt.
Are You Ready to Get Rid of Your Debts? Call a Jacksonville Bankruptcy Lawyer Today
The Law Offices of Justin McMurray, P.A. assist individuals, spouses, and business owners file for debt relief under the Bankruptcy Code. Our Jacksonville bankruptcy attorneys analyze your financial situation and explain bankruptcy options and non-bankruptcy options to help you decide whether a Chapter 7 or Chapter 13 bankruptcy case is the best way for you to become free from debt.
Call 904-248-4482 to schedule a free consultation with our Jacksonville bankruptcy lawyer.