One of the primary benefits to filing for bankruptcy in New Jersey is receiving an automatic stay of creditor collection activities. As a general rule, credit card companies, mortgage lenders and government agencies must put a stop to wage garnishment or planned lawsuits. Furthermore, they generally cannot contact you about a debt until your case has been resolved.
When does the automatic stay go into effect?
The automatic stay goes into effect as soon as your petition has been accepted by a bankruptcy judge. However, creditors will have an opportunity to object to the stay if there is reason to believe that you have filed in bad faith. In some cases, it will be lifted for some creditors while remaining in place for others.
What if a creditor obtained a judgement before the stay was issued?
- Courts have sent mixed messages as it relates to creditors who may have obtained a judgment before you filed for bankruptcy. For example, if a credit card company was in the process of taking money out of your bank account before it knew about your case, it might be able to complete that process without penalty.
What happens if a creditor takes action after the stay is in place?
In the event that a creditor takes action after the stay is in place, it could be subject to financial penalties. If a creditor foreclosed on your home, seized your car or took other tangible property, you will likely be entitled to reclaim those assets. Your attorney could take steps to protect your rights after filing for a consumer bankruptcy.
If you are struggling to pay mortgage, auto or other types of debts, it may be in your best interest to consider filing for bankruptcy. An attorney who practices this type of law can explain the process of doing so, help you fill out paperwork and provide more information about the potential benefits of seeking protection from creditors.