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If you owe large amounts of debt, you may feel desperate about protecting yourself and your family against creditor actions to recover the money you owe. Staying current on your bills can be a considerable challenge, as you scramble to somehow make ends meet while being able to enjoy an acceptable standard of living.
With the current economic climate in Colorado, many Lakewood residents have the threat of financial instability always hanging over their heads. Maybe you suddenly get sick or lose your job – you’re only one small misstep away from falling behind on your mortgage, missing a car payment, or being unable to pay your utilities, ending with a pit of debt you can’t seem to claw your way out of.
When you go into default on a debt, whether it is the mortgage on your family’s home or if it is a department store line of credit for a home appliance, the creditor has a right to take legal action against you to recover payment of the debt. Sometimes it’s letters, phone calls, or e-mails that come at all hours of the day and night, and sometimes it’s more severe– wage garnishments, repossession, or foreclosure.
If you’re a resident of Jefferson County, Colorado and any of the above resonates with you, there is help available. Bankruptcy allows people to start over by wiping away most if not all of their debts. If you are overloaded with debt and harassed by creditors, filing for Bankruptcy may be an excellent option for you.
Our experienced CO bankruptcy lawyers offer a free case evaluation. The idea is to help you determine whether bankruptcy is right for your financial situation and then forge a plan of action. Your lawyer will help you determine whether to file for Chapter 7 or Chapter 13 bankruptcy, and when you file, the automatic stay immediately goes into effect. Contact us now for more information.
The bankruptcy automatic stay is one of the most fundamental protections provided to a debtor in Chapter 7 or Chapter 13 bankruptcy cases. The automatic stay is a legal injunction that prohibits your creditors from doing anything more to collect the money that you owe them. It is a powerful and sweeping way to keep your utilities from being disconnected, and it also has the power to halt repossession and foreclosure. An automatic stay remains in effect for the duration of your bankruptcy case, whether the debts are discharged after the bankruptcy or if the court dismisses the bankruptcy petition.
Some specific examples of how the automatic stay can help Lakewood debt relief seekers include
Halts the Foreclosure Process- One of the most common questions our Lakewood bankruptcy attorneys get asked during a client’s case consultation is “how can I save my home from foreclosure?” While the answer to that question is complicated, the first step to halting a foreclosure begins with bankruptcy. An automatic stay basically means all collection, repossession, and foreclosure efforts are put on hold until the bankruptcy process is complete, giving a homeowner time to catch up on mortgage payments. For more information, see our relevant website on Home Foreclosures and Bankruptcy or contact our Lakewood debt relief lawyers for a case evaluation.
Allow You to Keep Your Utilities Connected- Even if you are in arrears on the monthly bills, the automatic stay can help prevent disconnection of your water, gas, telephone, or electric service for a minimum of 20 days. However you will have to make some attempt to assure the utility company that you can pay future bills, otherwise, your utilities will eventually be shut off once your bankruptcy case is completed.
Halt wage garnishments- Under Colorado state law, no more than 25 percent of a person’s salary can be taken to satisfy court judgments. That doesn’t sound like much until you think about working a 40-hour week and only receiving money for 30 hours of work because that 10 hours’ worth of work was garnished by your creditors to pay off a debt. If you have been having your wages garnished to satisfy a court judgment, then filing for bankruptcy immediately halts these garnishments.
Stops Harassment from Predatory Lenders- Constant harassment from creditors can be exasperating, tedious, and even embarrassing, especially if your creditors have stooped to contacting your family or even your employer in an attempt to collect a debt. An automatic stay bars all collection actions against you. That includes any and all types of creditor harassment.
Halts Repossession- Many Lakewood residents use their cars daily– to get to work or school, to see family, or just to enjoy the freedom of the road. Losing a vehicle due to repossession can have dire consequences. If you are behind on payments or a lender is threatening repossession of your car, the automatic stay immediately stops all debt collection actions, including the repossession of vehicles.
As you can see, with the automatic stay, you can very quickly protect yourself and your family against your creditors and debt collectors in addition to achieving a level of security and peace of mind that you may not have experienced for some time.
The automatic stay can quickly change a person’s life in many positive respects. However, there are some exceptions that the automatic stay doesn’t cover. Here are the most important examples:
Criminal Prosecution- If there’s a criminal action pending against you the automatic stay won’t apply.
Retirement Plan Loans- Any time you borrow from your 401(k) or other retirement loans, the government considers you borrowing from yourself as opposed to a debt you owe to a creditor. If you fail to pay any debt through a 401(k) or other retirement loan repayment then you will have to incur the penalties involved in the early withdrawal of money from your retirement.
Child Support or Alimony- If your paycheck is being garnished for past due child or spousal support, filing for bankruptcy won’t affect those types of garnishments.
Divorce – If you’re going through a divorce while filing for bankruptcy in Lakewood, you should know that the stay does not stop a paternity action or any lawsuits involving domestic support obligations, child custody, visitation, or other aspects of a divorce case.
Tax Administration- An automatic stay will not protect you from an IRS audit, and cannot stop the IRS from issuing a tax assessment, demanding your tax return, or demanding payment once a tax assessment has been issued.
Not all creditors abide by the restrictions of the automatic stay. Most of the time, automatic stay violations occur due to poor timing or ignorance. For one reason or another, the creditor does not realize an automatic stay is in place and continues collection efforts as usual.
Very rarely is an automatic stay violated intentionally because most creditors are aware that penalties for violating an automatic stay can be steep. The penalty for violating an automatic stay varies depending on what the creditor has done and whether their actions were deliberate.
If you do receive contact from a creditor after you’ve filed for bankruptcy in Jefferson county, you should inform your Lakewood bankruptcy attorney immediately. If contact continues beyond the first time, you have a right to take action against the creditor.
If you’re ready to pursue bankruptcy to free yourself of financial burdens, contact our experienced Lakewood debt relief attorneys today and set up an appointment. We have knowledgeable and helpful Jefferson County bankruptcy attorneys available for a no-cost case consultation. One of our legal professionals can answer any questions you may have about the automatic stay, Chapter 7 bankruptcy, or Chapter 13 bankruptcy as well as address any concerns you may have about debt relief.