Hiring a lawyer is not usually an inexpensive option—most people go into sticker shock when they look at the cost of filing for Chapter 7 bankruptcy. When you’re already having trouble with debt, a new expense can seem unfathomable. However, there’s one thing that bankruptcy filers aren’t considering: the automatic stay.
An automatic stay is one of the benefits of filing for bankruptcy. When you file, the court issues an official order that your creditors can no longer harass you to collect on payments. You won’t have to make any payments (with exceptions, of course, like child support) to lenders, which means you’ll have some extra funds to divert to your case. Because a bankruptcy attorney can help you retain certain assets and ensure you’re getting the best deal possible, they’re well worth the money.
Here’s how an automatic stay can make filing for Chapter 7 bankruptcy in Carlsbad, CA more affordable.
Chapter 7 bankruptcy and automatic stays
As noted above, an automatic stay is a court order that stops your creditors from coming after you during the proceedings. If your bankruptcy is granted and the debt is discharged, you won’t have to deal with them anymore. If it is denied, they’ll be able to pursue you and the debt after that.
What you’ll pay during a Chapter 7 proceeding
When filing for Chapter 7 bankruptcy, be aware that you’ll need to sell off most of your assets (with exemptions) to pay off your creditors—but after that, you’ll be free and clear of those debts. However, there are still some debts you’ll need to keep paying.
First, any debts you incur after filing, like rent or leases, utility bills, child support, insurance and most taxes will still need to be paid. Some pre-bankruptcy debts (for example, if you’re behind on your utility bills) might be wiped out, but others, like child support, will continue to come due.
If you have a major loan secured by collateral (for example, a car loan or mortgage), that’s called a secured debt. On one hand, you can choose to return the property—be it a home or a car or other property—to the lender to discharge your debt. If you’re hoping to keep it, however, you’ll need to continue to make payments. Otherwise, the lender can sue to foreclose on the property to recover their interest in it.
Even if you have debts you still must pay back, like student loans, your bankruptcy proceeding may provide a temporary reprieve. You’ll still be liable for those debts, but you will be able to take a break from paying them while the case plays out.
That’s why hiring a bankruptcy attorney is well worth the money you pay. What looks like a huge amount now might not be so unfathomable once you get a payment break.
Gregory S. Hood, Attorney at Law, P.C. can help with making bankruptcy more affordable in Carlsbad, CA. Call today to arrange a consultation—we look forward to discussing your situation.