What happens when you file for Chapter 7, 11, 13 Bankruptcy?
When you file, you fill out a form called Schedule C, listing the names and addresses of all creditors. This provides notice to the creditors. Once the creditors are notified, they cannot attempt to contact you for repayment until bankruptcy proceedings conclude, even if you do not receive a discharge. This is called an automatic stay. Automatic stay governed by the Bankruptcy Code 362 serves as a temporary injunction against creditors, which becomes enforced automatically at the time of filing. As a result, the creditor cannot contact the debtor or ask for payment, begin litigation against the debtor or continue pending litigation, enforce judgment or stop enforcement activities against the debtor, perfect a lien against property of the estate, repossess property that is part of the property of the estate, and initiate or pursue non-judicial or judicial foreclosure against property of the estate. Any creditor must abide by this automatic stay even before bankruptcy proceeds are made known to them. Any creditor that willfully attempts to commit one of the excluded acts during an automatic stay is guilty of willful violations and may face sanctions under section 362(h). Under certain circumstances does the automatic stay end, which is set in section 362(c). Also, there are also circumstances where creditors can be excused from this automatic stay A secured creditor may be able to receive interim payments during the automatic stay upon certain conditions set by state law. Section 362 governs chapters 7, 11, and 13. However, there are certain variations within each chapter which is why it is recommended for consumers to seek legal advice online .
Chapter 7
Under chapter 7, it may not be as easy for a secured creditor to seek relief from automatic stay. In an attempt to reduce the frequency of this, several factors are considered. When dealing with a secured creditor, some options a debtor has include (1) continuing payments of the secured debt despite the filing of the bankruptcy petition, (2) reaffirming the secured debt and making payments under the new reaffirmation agreement with the secured creditor; (3) redeeming collateral from the lien; or (40 surrendering the collateral to the secured creditor. If the debtor takes none of these actions, the creditor can obtain remedies through litigation after the debtor receives his or her discharge.
In a chapter 7, a secured creditor can seek relief from stay in the following circumstances. First, the secured creditor can get relief when a property with significant value is uninsured or subject to unacceptable risk. Second, the secured creditor can get relief when a property with significant value is depreciating rapidly and the creditor has reason to believe that the debtor will not promptly surrender the collateral, reaffirm the debt secured by the collateral, or redeem the collateral from the line. Third, the secured creditor can get relief when the creditor holds a consensual lien on a debtor's residence and the debtor has defaulted on mortgage payments and appears unable to maintain continuing mortgage payments or promptly cure arrearages (or overdue payments).
Chapter 13
In a chapter 13, a secured creditor may be forced into a repayment plan if a repayment plan is approved by the court. Usually, a secured creditor may not seek relief from automatic stay because the cost does not justify the benefits of relief. However, a secured creditor may find it beneficial to seek relief from stay if the secured creditor is concerned about uninsured property having significant value or a secured creditor seriously doubts the likelihood of prompt confirmation of the plan. Under a chapter 13, it may be not be easy for a secured creditor to be granted relief from automatic stay. Also, a secured creditor with a consensual lien may seek relief from automatic stay in order to foreclose where the debtor is in arrears (or overdue) on mortgage payments and where it seems that the debtor will not be able to make plan payments that both covers overdue payments and maintain current payments.
Chapter 11
In a chapter 11 case, it is usually easier for creditors to be granted relief from automatic stay, especially secured creditors, because of the long duration between filing of the bankruptcy petition and confirmation of the plan. Usually this happens because a secured creditor may be unsure about the debtor's abilities to successfully reorganize and make the payments under the confirmation plan. In certain situations, the court may deny creditors relief from automatic stay and permit foreclosure on the collateral, but also will order the debtor to make interim payments to the secured creditors to protect against depreciation in the value of the collateral.
If you have any questions regarding bankruptcy, you should seek immediate legal advice.
Chapter 7
Under chapter 7, it may not be as easy for a secured creditor to seek relief from automatic stay. In an attempt to reduce the frequency of this, several factors are considered. When dealing with a secured creditor, some options a debtor has include (1) continuing payments of the secured debt despite the filing of the bankruptcy petition, (2) reaffirming the secured debt and making payments under the new reaffirmation agreement with the secured creditor; (3) redeeming collateral from the lien; or (40 surrendering the collateral to the secured creditor. If the debtor takes none of these actions, the creditor can obtain remedies through litigation after the debtor receives his or her discharge.
In a chapter 7, a secured creditor can seek relief from stay in the following circumstances. First, the secured creditor can get relief when a property with significant value is uninsured or subject to unacceptable risk. Second, the secured creditor can get relief when a property with significant value is depreciating rapidly and the creditor has reason to believe that the debtor will not promptly surrender the collateral, reaffirm the debt secured by the collateral, or redeem the collateral from the line. Third, the secured creditor can get relief when the creditor holds a consensual lien on a debtor's residence and the debtor has defaulted on mortgage payments and appears unable to maintain continuing mortgage payments or promptly cure arrearages (or overdue payments).
Chapter 13
In a chapter 13, a secured creditor may be forced into a repayment plan if a repayment plan is approved by the court. Usually, a secured creditor may not seek relief from automatic stay because the cost does not justify the benefits of relief. However, a secured creditor may find it beneficial to seek relief from stay if the secured creditor is concerned about uninsured property having significant value or a secured creditor seriously doubts the likelihood of prompt confirmation of the plan. Under a chapter 13, it may be not be easy for a secured creditor to be granted relief from automatic stay. Also, a secured creditor with a consensual lien may seek relief from automatic stay in order to foreclose where the debtor is in arrears (or overdue) on mortgage payments and where it seems that the debtor will not be able to make plan payments that both covers overdue payments and maintain current payments.
Chapter 11
In a chapter 11 case, it is usually easier for creditors to be granted relief from automatic stay, especially secured creditors, because of the long duration between filing of the bankruptcy petition and confirmation of the plan. Usually this happens because a secured creditor may be unsure about the debtor's abilities to successfully reorganize and make the payments under the confirmation plan. In certain situations, the court may deny creditors relief from automatic stay and permit foreclosure on the collateral, but also will order the debtor to make interim payments to the secured creditors to protect against depreciation in the value of the collateral.
If you have any questions regarding bankruptcy, you should seek immediate legal advice.