Americans cannot turn on the television, or read a newspaper or magazine without being reminded about the down economy, high unemployment numbers, or the mortgage foreclosure crisis. This has many people considering filing bankruptcy as a solution to their financial difficulties. What people should know is that filing bankruptcy has many advantages, whether it is a Chapter 7 or a Chapter 13 bankruptcy. There are far more positive results from filing bankruptcy than there are negatives.
One of the biggest positive benefits of filing bankruptcy is that it provides a court ordered relief that triggers the automatic stay. The automatic stay is a legal order that prohibits all creditors and debt collectors from pursuing the individual filing bankruptcy or their property outside of the bankruptcy proceeding. This is especially important for individuals facing foreclosure, repossession, lawsuits and wage garnishments. Filing bankruptcy was designed to give individuals legal protections that can stop situations like these, while allowing them some breathing room from overwhelming debt.
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Nowadays, creditors have become extremely aggressive when it comes to debt collection. A favorite tactic to collect the debt is to garnish the debtor's wages. This will ensure payment on the debt, but at the expense of the financially strapped individual. However, filing bankruptcy will stop a creditor from garnishing a debtor's wages, whether they are threatened with a garnishment or it is already in place. Once the bankruptcy is filed with the court, the automatic stay is immediately put in place which means that the creditor cannot contact the debtor regarding the debt, can't sue for the debt, and they can't try to collect on the debt.
A wage garnishment is considered a collection proceeding under the bankruptcy code, which means that the creditor that either starts a wage garnishment or tries to continue garnishing the debtor's wages is violating the debtor's rights to the automatic stay on all collection activity under the bankruptcy code. This can carry harsh penalties for the creditor in violation from the bankruptcy court and Department of Justice. If an individual is having their wages garnished or has received word from their employer that a creditor is going to garnish their wages, they should contact an experienced local bankruptcy attorney to discuss their legal rights and options.
Not only can filing bankruptcy protect an individual from lawsuits, judgments, foreclosure and wage garnishments, but they can also get out from under tremendous debt and gain a fresh financial start.
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