Debt collectors are aware that they will be unable to contact the debtor once the bankruptcy petition is filed because of the automatic stay. If they do, they will be in violation of the automatic stay and the bankruptcy court may bring sanctions against them. Due to the flagrant violation, the debtor can receive damages and legal fees for his or her bankruptcy attorney from persistent violators.
The purpose of Chapter 7 bankruptcy is to eliminate a substantial quantity of unsecured debt and give the debtor a fresh start. Due to this, Congress added generous bankruptcy exemptions to the bankruptcy code, allowing debtors to retain a substantial quantity of their personal property. Filing for bankruptcy is a federal court procedure, but each state has laws that complement federal law. Each state will have its own set of bankruptcy exemptions to shield an individual's assets from creditors. When registering for bankruptcy, a person has the option of using either federal exemption laws or state exemption laws. The majority of individuals will utilize his state's bankruptcy exemptions because they are more tailored to the region in which an individual resides. In the corn belt, for instance, they may have an exemption to preserve a farmer's tractor and make it exempt regardless of the property's value. These were written with the knowledge that if the farmer's tools were taken away, he would be out of business and unable to obtain a second opportunity.
In the current economic climate, Chapter 7 bankruptcy filers rarely lose property. The bankruptcy trustee is primarily interested in liquid assets or currency. The trustee will always consider the cost of accumulating and selling an item in relation to the reward. Currently, the value of property has decreased substantially, making it more difficult to liquidate the majority of property. If someone had a car with a blue book value of $8,000 and only $5,000 was protected by bankruptcy exemption laws, the bankruptcy trustee would likely not be interested in liquidating it because it would not be worth their cost and time to seize and sell the property for $6,000.
This supports the notion that the debtor should be represented by a bankruptcy attorney. An experienced bankruptcy attorney will be familiar with the bankruptcy exemption laws and the requirements of the trustee for a successful bankruptcy discharge. It is difficult to quantify the value of the knowledge gained by an attorney through experience. Before believing what someone says, one should consider the source and consult an expert to determine the veracity of the information.
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