Every year, hundreds of thousands of people across the United States file for bankruptcy, seeking the protection of the bankruptcy court. This “bankruptcy protection” is an essential component of the bankruptcy process, and is crucial for ensuring people going through bankruptcy are able to recover from their financial situations. But what exactly is bankruptcy protection, and how does it help people suffering from extreme financial distress?
Defining Bankruptcy Protection
In simple terms, bankruptcy protection is the legal shield that the court provides to anyone filing for bankruptcy. In formal terms, this protection is known as the “automatic stay,” which goes into effect the moment a person files for bankruptcy. While the automatic stay is in effect, all legal proceedings relating to a person’s financial situation stop, and they stop accruing interest on their debts or suffering penalties due to failing to pay those debts.
What Bankruptcy Protection Does
The primary purpose of this type of protection is to ensure that anyone filing for bankruptcy cannot be targeted by creditors while they are trying to get their finances in order. This protection prevents creditors from going after the person filing for bankruptcy, preventing them from garnishing a person’s wages, seizing their property, or enforcing liens. It also prevents landlords from initiating eviction proceedings against people filing for bankruptcy, and halts any ongoing foreclosure proceedings against bankrupt homeowners.
Why Bankruptcy Protection is So Important
The reason it is so important that bankrupt individuals receive this protection is simple: people in severe financial distress are in a situation where they cannot recover their finances on their own. This protection helps to curtail some of the worst possible circumstances that arise when someone is burdened with overwhelming debt, by preventing people from losing their property or their homes. That way, they can sort out their financial situation in relative safety and peace.
The Choice to Declare Bankruptcy
That said, bankruptcy is not necessarily for everyone. Some people may not be able to qualify for bankruptcy, while others may have solutions to their situation that do not require filing for bankruptcy. In addition, there are multiple types of bankruptcy, such as Chapter 7 “liquidation” bankruptcies and Chapter 13 “wage earner’s plans,” which may have varying levels of applicability to your situation. Ultimately, the only way to know for sure if bankruptcy is right for you, is to speak to a lawyer with experience handling bankruptcy matters.
Bankruptcy is a complicated and stressful process, and one you shouldn’t attempt to undertake on your own. If you are in severe financial distress and considering bankruptcy, call the bankruptcy attorneys at McGuire, Pelaez & Bennett at 631-348-1702, or visit our contact page. Our offices are conveniently located in Central Islip, right here on Long Island. Our bankruptcy attorneys will work with you to ensure the best possible outcome for you and your family, and make sure that you gain the maximum possible benefit from bankruptcy.