Know Your Rights

It is important to know your rights. Chapter 7 and Chapter 13 bankruptcy law is governed by federal law. Additionally, Illinois state law defines certain exemptions that you can claim when filing for bankruptcy. One of the more amazing features of a bankruptcy filing is the “automatic stay”. You have the right to be left alone, to have some “breathing room” during the course of your bankruptcy. When you file for bankruptcy, an automatic stay is imposed. The automatic stay prevents creditors from contacting you during your bankruptcy, except as permitted by a federal bankruptcy judge. When you file for bankruptcy, all of your creditors are sent a bankruptcy notice. If this notice has been properly sent to each and every one of your creditors, your phone should stop ringing, collection letters should stop, court action (including wage garnishments and bank levies) should stop in most cases, and no one can approach you to collect a debt, unless granted permission by the bankruptcy judge. There are strict penalties for knowing violations of the automatic stay, and so, the more sophisticated creditors know better than to contact you without permission from the bankruptcy judge in your case. You will often not receive any paper or electronic invoices or statements, and at the bank level, you will likely lose online access and automatic deductions for pre-filing debts (this mean that you have to make your payments by phone or at your bank branch during the bankruptcy period). In my experience, the creditors who usually seek to modify the stay are mortgage lenders (if you are in foreclosure) and vehicle lenders (if you motor vehicle is in default, and you are facing a replevin, or “repo” action).

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