How Bankruptcy Stops Creditors
Some clients think that bankruptcy attorneys stop creditors through some legal strong-arm tactic. In truth, the method by which creditors are prevented from making collection calls, repossessing cars, or foreclosing upon homes has little to do with the attorney and a lot to do with the automatic stay. Once a bankruptcy petition is filed with the appropriate court an automatic injunction against collection actions comes into effect. This automatic injunction is known as the automatic stay. Therefore, when bankruptcy attorney Michael Benavides files a bankruptcy petition with the court the automatic stay comes into effect and prevents creditors from taking collection actions.
Bankruptcy Attorneys Put Creditors On Notice
While bankruptcy attorneys do not hold the key to stopping creditors (11 USC Section 362 does), they can put creditors on notice of the automatic stay and thereby prevent collection actions in violation of the automatic stay from taking place. By putting creditors on notice of the automatic stay creditors cannot take collection action without risking contempt proceedings. In practice, attorneys put creditors on notice of the automatic stay when a creditor is being aggressive or a certain collection event is on the horizon. For instance, if a bankruptcy attorney files a petition on Tuesday, but a foreclosure sale is scheduled for Wednesday, the attorney will make sure the creditor is notified of the bankruptcy to stop the foreclosure from going forward. Methods for putting creditors on notice of the automatic stay include phone calls, letters or physical appearance at a collection event with the petition in hand.
How Bankruptcy Attorneys Can Help Stop Creditors
Bankruptcy attorneys can electronically file a petition with the court and take steps to ensure that particular creditors are put on notice of the bankruptcy filing. An attorney can call lenders if a collection event like repossession or foreclosure is likely to occur in the near future. Once noticed of the bankruptcy filing the repossession or foreclosure cannot continue. Therefore, attorneys can put creditors on notice of the automatic stay and thereby prevent collection actions in willful violation of the automatic stay from occurring, but the automatic stay is the legal basis upon which collection actions must cease after filing a bankruptcy petition with the court.