For many residents of the Florida panhandle, filing a bankruptcy petition is usually viewed as the financial equivalent of walking the plank. While bankruptcy can be a complicated and stressful procedure, the filing of the petition can provide a significant amount of protection against the debtor’s creditors.
The filing of the petition, whether done under Chapter 7 or Chapter 13, provides an instant barrier against the claims of all creditors that were asserted prior to the filing of the petition. The barrier, usually referred to as the “automatic stay,” is much like a court order that goes into effect immediately upon filing of the petition. It is addressed to the debtor’s creditors and prohibits “commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor. . . .” The stay lasts until either an order of discharge is entered or a party succeeds in persuading the court to dismiss the stay.
Most people want to know what will happen to their home if they file bankruptcy. The stay will automatically stop any mortgage foreclosure proceeding that was or could have been commenced before the petition was filed. The fate of the lien of the mortgage will be worked out during the bankruptcy proceeding. The same is true of other liens, such as a security interest in a car.
Anyone who is struggling with financial problems may wish to explore the advantages of bankruptcy and the automatic stay with an experienced bankruptcy attorney. A knowledgeable lawyer can explain the mechanics of the automatic stay and also provide advice on whether a person should file a petition and whether the petition should be filed under Chapter 7 or Chapter 13.