Does the Automatic Stay Mean You Don’t Have to Pay Your Debts?
When you file for personal bankruptcy, whether you’re seeking to permanently discharge debts in Chapter 7 or want to set up new payment arrangements through Chapter 13, the automatic stay immediately goes into effect, preventing creditors from calling, writing or taking any other action to collect the debt, other than through the bankruptcy proceeding. Does that mean you don’t have to pay current debts? Can you claim the automatic stay with respect to all your bills?
The Effect of a Bankruptcy Filing
It’s important to understand, first of all, that your bankruptcy petition applies only to debts that you have incurred at the time of filing. It won’t have any impact on subsequent bills or obligations. For example, if you have medical debt at the time of filing, the automatic stay will prevent the provider from suing you or engaging a collection agency to collect the debt incurred at the time of filing. But if you receive medical care after your bankruptcy petition, you must pay for it. The provider won’t be prohibited by the automatic stay from taking any type of action to collect that debt.
It’s also important to understand that bankruptcy simply won’t apply to certain types of debt.You must always pay child and spousal support. In addition, most tax arrearages won’t be affected by a bankruptcy filing.
Furthermore, while a bankruptcy filing will prevent a creditor from attempting to collect a debt,it won’t have any impact on liens. If you have property that is secured by collateral, you must continue to make payments after the bankruptcy or the creditor can exercise his or her rights to either foreclose (with a mortgage) or enforce a lien (with a car or other collateralized property).
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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