The US Bankruptcy Court advises individuals registering for bankruptcy to take the following precautions. The rules governing bankruptcy filings are extremely technical, and a mistake can affect a debtor's rights and thus your eligibility to file. For instance, a debtor's bankruptcy petition may be dismissed if he or she fails to submit a required document, such as a certificate of credit counseling, income and expenses report, SIN card, etc.
i) Declaring bankruptcy is a long-term decision with numerous future consequences. It is therefore recommended to retain a competent bankruptcy counsel or attorney with many years of experience and a success rate of one hundred percent.
ii) Be wary of companies that claim they can help you file for bankruptcy at a lower cost than a bankruptcy attorney; most of the time, these companies are just out to swindle you out of your money. The law prohibits these companies from assisting clients in filing for bankruptcy; they may only assist you in completing the necessary paperwork. A bankruptcy attorney, on the other hand, has the knowledge and expertise to give you legal advice, answer all of your questions, assist you through all legal court proceedings, and connect you with a qualified credit counsellor for credit counselling services.
One of the most effective aspects of declaring bankruptcy is that it prevents debt collectors from contacting you, harassing you, or intimidating you over unpaid debts. Once you register for bankruptcy, all debt collection actions must go through the bankruptcy court, and creditors are prohibited from taking any further action against you. The ""automatic stay"" will go into effect upon the filing of a bankruptcy petition. Except for certain secured debts (discussed below), this automatic stay prohibits creditors and collection agencies from contacting you or taking any action against you. Let's examine some of the debts that can be discharged through bankruptcy and for which debt collectors cannot pursue legal action.
TIP: Filing for bankruptcy is not required to halt creditors from calling, threatening, or harassing you. You can instead write a Stop Contacting Me letter to your creditors, and the Fair Debt Collection Practices Act (FDCPA) prohibits them from contacting you for debt collection purposes. Instead of them threatening you over the phone, you could threaten to report their calls to the police if they don't cease.
i) Credit card debt, medical expenses, or legal fees
Once you file for bankruptcy, all debt collection actions related to credit card debts, medical expenses, and attorney fees must cease. Creditors are prohibited from filing a lawsuit against you, and even if they do, they will be unable to proceed in court because of the automatic stay (see above). Creditors are also prohibited from recording liens against your property, forcibly seizing your property (rendering their debt collection threats ineffective), or reporting your debts to a credit bureau. In addition, spreading false information about your bankruptcy petition is a violation of the automatic stay and illegal under the law.
ii) Public Benefits
You are safeguarded against government agencies reducing or terminating your public benefits, such as Medicaid, Social Security Income, or welfare benefits. They can only terminate your public services if you become ineligible for them due to natural causes.
iii) Criminal Proceedings
Bankruptcy does not halt the collection of criminal fines, debts, or penalties, including fines for criminal proceedings. While your bankruptcy petition is pending, you will still be required to complete any pending criminal proceedings.
iv) Residence Foreclosure
When you file for bankruptcy, home foreclosure proceedings can be temporarily halted; however, a builder or your mortgage lender can petition the judge to lift the stay and proceed with the home foreclosure; therefore, you should NOT rely on bankruptcy to end your home foreclosure proceeding. This means that homes and mortgages secured by residences are exempt from bankruptcy protection. In addition, the automatic stay does not apply if you have filed for bankruptcy within the past two years and the court in that proceeding allowed the lender to proceed with the foreclosure process based on a determination that you filed bankruptcy to improperly transfer your wealth or interests, hinder or defraud creditors, or as part of a scheme involving multiple filings. A series of bankruptcies cannot prevent the foreclosure of a residence.
v) Expulsions
If the landlord already had a judgment allowing him to evict you from the property before the bankruptcy was filed, the automatic stay cannot halt the eviction. In addition, the landlord may initiate eviction proceedings against the tenant if he can demonstrate that the tenant's presence poses a hazard, such as drug use, chemical grow operations, etc.
vi) Utilities
The utility companies that provide you with gas, water, electricity, heating oil, or telephone service cannot terminate service because you have filed for bankruptcy. However, they have the right to terminate your service 20 days after you file for bankruptcy if you do not provide a deposit or other assurance of future bill payment.
vii) Income Taxes
The Internal Revenue Service (IRS) cannot issue a tax lien or seize your property or income due to an automatic stay. However, the IRS may still request the following tax documents:
* File a tax return * Conduct a tax audit * Issue a tax deficiency notice * Seize your income tax refund to pay a tax debt from a prior year.""
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