What Does it Mean to Enter Bankruptcy Protection? |
By Graham Billings on April 21, 2010
.jpg.aspx) The bankruptcy process can be long and confusing. However, one of the most relieving aspects of filing for bankruptcy for debtors is the relief from creditors. From the time your bankruptcy filing enters the court, you will enter bankruptcy protection.
Bankruptcy protection describes the process through which you make your payments to pay off your debt and keep your assets. Regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy, if you stick to the court-ordered payment plan, then creditors are not allowed to enter more claims against you. In short, bankruptcy protection means that you will be allowed to protect your assets and way of life from creditors.
As a result, one of the most important aspects of bankruptcy protection for debtors is the automatic stay against foreclosures, lawsuits, calls, and all other advances by creditors. Again, once you have filed for protection, then creditors are no longer allowed to try to collect outside of the court-ordained process, as long as you complete the necessary requirements along the way. If you break from the court’s plan – in particular, during the Chapter 13 process – then you no longer have bankruptcy protection, so it is important to stay up on your schedule.
The most important facets of the bankruptcy process are honesty and commitment. If you report your assets and income correctly in order to enter the right kind of bankruptcy and tell the court your situation, then the court will attempt to do what is best for you. If you go through the payment process according to the court’s schedule, then you will keep your protection throughout the process and exit bankruptcy in a better situation than when you entered. Similarly, if you stick to your new budget for the duration of the period in which bankruptcy is on your credit report – ten years for Chapter 7 and seven years for Chapter 13 – then it will pay off in the end with a better credit score and budget.
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