How Filing for Bankruptcy Can Help: The Benefits of Filing for Bankruptcy

Interviewer: So when someone is considering filing for bankruptcy, what are the benefits they’ll realize as they file? Do they have to go through a long, torturous process to get any relief, or will they receive an immediate benefit when they file?

Automatic Stay: Bankruptcy Filing Offers Consumers Immediate Relief

Court: It’s immediate relief. Once you file, what will happen under the bankruptcy law is there is an automatic stay that goes into effect. That stay applies to anybody who is trying to collect a debt from you or anybody who is suing you, even in a different court for something unrelated to bankruptcy like a debt collection or even a civil lawsuit for a personal injury or something like that.

Anything that’s going on relating to collecting money from you has to stop. It’s kind of like a pause button.

You have to allow all the dust to settle, administer your bankruptcy estate, and then after that process is completed, sometimes the debts are discharged. However, sometimes they are able to come back after the bankruptcy is over and collect from you in the future, if it’s a certain kind of debt.

Once Creditors Receive Notice of Your Filing, They Are Required to Cease Collection Activity

As soon as a bankruptcy attorney files that petition, the clerk at the bankruptcy court sends out notices. As soon as the creditors get those notices, they are not allowed to contact you.

If they keep contacting you, they can get into a lot of trouble. So they are really good about not violating that automatic stay.

Interviewer: When you file, you receive a case number, is that right? You want to keep that with you as your protection?

Court: Usually, you don’t have that many problems. When I file bankruptcy for a client, I give them a copy of the official filing notification, and it has a date and time stamp on it, and it has your case number.

Most Lenders Will Want to View your Bankruptcy Filing Paperwork

Sometimes people need that – sometimes people want to go and get a car loan or something like that after they’ve filed. Most of the time, the lenders will want to see the bankruptcy notice to make sure that they filed and what day they filed.

When it comes to bill collectors contacting you, I don’t have a lot of problems. The bill collectors are really so paranoid about it, because they can really get in a lot of trouble. If you say, “I filed bankruptcy”, most of the time you’re not going to have trouble. You can tell them, “contact my lawyer” and then I take care of it for you.

Interviewer: That’s great that someone who could be not sleeping for months because this problem is weighing on their mind. When they come to see you, it’s potentially that night that they can go home and feel relief right then?

If anyone calls, they can give them their case number, if their car’s going to be repossessed they can stop that, if they’re going to be foreclosed, they can pause that. Is that what you’re saying?

Court: Yes, the automatic stay does afford people the chance to recover a good sleep at night because it will result in having collection activity cease.

Interviewer: That’s amazing. It’s just amazing that relief can come so quickly when someone finally makes that decision to file

Court: Yes. It’s great and most people don’t realize how much bankruptcy can help them. Like I said, they let the stress and its side effects become a part of their life for too long, which is a shame because help is really right there around the corner.

By Court Koehler

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