The Limits of the Automatic Stay
One of the most tangible benefits of a personal bankruptcy filing is the immediate application of the automatic stay, which allows you to suspend payment on those debts included in the petition while you either move toward discharge of debts or reorganization. There’s a common misunderstanding, though, that filing for bankruptcy protection means you don’t have to make any payments to creditors until you’ve worked out a payment plan or completed the discharge. To the contrary, there are obligations that you must pay, even if your bankruptcy is actively in process.
You Must Pay All New Debts You Incur
A bankruptcy petition only applies to those debts already incurred on the date of filing. Accordingly, if you incur new credit card debt or new medical debt after the date you entered bankruptcy, it will not be covered by your petition. The creditor may call, write or take legal action against you to recover that debt, even though you have filed for bankruptcy protection.
Bankruptcy Does Not Affect Any Liens on Property
A Chapter 7 bankruptcy filing will discharge qualified debt, but has not impact on any liens that attach to property because of a debt. For example, your mortgage or car loan will typically include a lien, which can be exercised according to the terms of the agreement. If you have property that is secured by collateral and you want to keep that collateral, you will need to continue making payments on those debts.
Contact Attorney Howard N. Sobel
At the office of Howard N. Sobel, we provide personal bankruptcy counsel to men and women throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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