UTAH BANKRUPTCY LAW HANDBOOK




STOPPING CREDITORS

Not always, but frequently, consumers considering bankruptcy options are unable to pay their debts as they become due.  Creditors may become very aggressive in their efforts to collect debts owed by consumers, and relentlessly call, threaten and harass individuals at their homes and work, causing stress, embarrassment, and sometimes even jeopardizing a debtor's employment.

Filing Chapter 7 or 13 stops Creditors cold.  Immediately upon initiating a bankruptcy case, the automatic stay under the Bankruptcy Code comes into effect.  The automatic stay prohibits all Creditor actions against an individual in bankruptcy.  The automatic stay is a very powerful, broad prohibition against Creditor actions and prevents Creditors from taking the following actions:

   CREDITORS ARE PROHIBITED FROM CONTACTING YOU BY TELEPHONE OR  CORRESPONDENCE.

   CREDITORS CANNOT REPOSSESS YOUR VEHICLE OR TAKE ANY OTHER PROPERTY OF YOURS.

   FORECLOSURE ACTIONS ARE STOPPED, EVEN IF YOU INITIATE YOUR BANKRUPTCY CASE IMMEDIATELY PRIOR TO A FORECLOSURE SALE.

   EVEN IF A CREDITOR HAS ALREADY REPOSSESSED YOUR VEHICLE, THEY ARE PROHIBITED FROM SELLING IT IF THEY HAVE NOT ALREADY DONE SO PRIOR TO YOUR BANKRUPTCY FILING.

   ALL GARNISHMENT ACTIONS ARE STOPPED.  IF YOU FILE BANKRUPTCY BEFORE A PAYCHECK IS CUT AGAINST WHICH THERE IS A GARNISHMENT, YOUR EMPLOYER MAY NOT HONOR THE GARNISHMENT AND MAY NOT WITHHOLD FUNDS FROM YOUR PAYCHECK FOR THE BENEFIT OF YOUR CREDITOR.

   CREDITORS ARE PROHIBITED FROM CONTINUING WITH EVICTION PROCEEDINGS, REGARDLESS OF THE STATUS OF ANY SUCH PROCEEDING.

When necessary, bankruptcy attorneys can initiate a bankruptcy case for you immediately to stop Creditor actions. 

If you are behind on payments to secured creditors, the secured creditor can seek relief from the automatic stay from the bankruptcy Court to enable them to proceed with a repossession, foreclosure, etc.  In seeking relief from stay, it is necessary for them to notify your attorney of their intent to seek relief from the automatic stay, and to schedule it for hearing before the Bankruptcy Court.  Relief from the stay will generally be granted in a Chapter 7 case if a Debtor is behind on payments to a secured creditor.  However, in a Chapter 13 case, arrearages to all secured creditors can be cured in a Chapter 13 plan.  The Creditor is forced into permitting you to catch up on all payments on which you are behind in a Chapter 13 case, including installment payments against your vehicle, mortgage payments, and all other obligations.

DISCLAIMER

NO INFORMATION OR MATERIALS CONTAINED HEREIN ARE INTENDED TO CONSTITUTE LEGAL ADVICE, AND IS NOT APPLICABLE TO ANY SPECIFIC SET OF FACTS, ESPECIALLY AS TO ANY INDIVIDUAL'S PERSONAL SITUATION.  THE INFORMATION CONTAINED HEREIN NOR THE PERUSAL OF IT DOES NOT ESTABLISH NOR CONSTITUTE AN ATTORNEY-CLIENT RELATIONSHIP WITH UTAH BANKRUPTCY PROFESSIONALS OR ANY OF ITS ATTORNEYS. 

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