Bankruptcy Basics

: Reese Baker & Associates

  Filed under: bankruptcy

Bankruptcy is a process under federal law for debtors who owe more than they can pay. Bankruptcy can either eliminate your debt or let you work out a plan to pay it back over time. Bankruptcy helps you get back on your feet, giving you the fresh start you need.

The United States Bankruptcy code that most individuals deal with is Chapter 7 and Chapter 13. Getting the advice of a qualified bankruptcy attorney will help you decide which option is best for you and your family’s financial situation. The attorney will look at your finances, your income, and the type of debt that you have.

Automatic Stay

The court bars creditors from attempting to contact you regarding your debt as soon as you file your paperwork. There is no hearing, prior notification, or a judge’s approval for it to go into effect. If a creditor attempts to contact you after they have been notified of the automatic stay, you may be able to file a legal complaint. Sometimes a creditor may ask for the automatic stay to be lifted, so they will have the right to attempt to collect the debt or take possession of the collateral. This usually only occurs if the creditor believes the collateral is at risk for harm and to protect the creditor’s interest.


Some of the benefits of the automatic stay are that the phone calls and letters from creditors will stop. During the bankruptcy process, your vehicle cannot be repossessed, and your mortgage cannot be foreclosed on. If you already have a wage garnishment, frequently these will stop as well. The exception to the automatic stay will be child support and alimony. You will still need to keep these obligations current.

If you think bankruptcy will solve your financial crisis contact a Rio Grande bankruptcy attorney to discuss what options you may have.