Federal bankruptcy law is designed to provide protection from creditors. The purpose of Chapter 7 and Chapter 13 of the bankruptcy code is to provide consumers with a fresh start by freeing them from burdensome debt.
One of the most powerful forms of protection that bankruptcy provides to consumers is the automatic stay. Most creditor actions are prohibited by the automatic stay, including:
- Foreclosure
- Vehicle or other property repossession
- Paycheck garnishment
- Government tax liens and levies
- Phone calls by creditors
- civil lawsuits
The claims of creditors will still exist, but they cannot take action to collect on those claims. Unsecured debts will usually be eliminated through discharge. Those creditors that have a security interest in property will be treated differently depending on whether you wish to keep the property.
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