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How Long Does Bankruptcy Take to Stop Collections?

Collections activities make it very difficult to keep your cash in your bank. The most common collections activities are repossessions, wage garnishments, and bank account levies.

A wage garnishment occurs when a judgment is ruled against you in court by one of your creditors who, in-turn, initiates a wage garnishment collection activity with the authorities. A wage garnishment make take a few weeks for your creditor to organize, but they have the right to initiate one if they have a judgment against you related to a debt collection. Your employer will be notified and they are forced to cooperate with the authorities in the collection activity of a wage garnishment. A wage garnishment can be stopped immediately after a bankruptcy petition is filed. The filing of a bankruptcy petition provides a case number and activates an automatic stay provision which stops all collections activities from moving forward. The creditor who initiates the wage garnishment and any agents helping with the wage garnishment need to be notified with a bankruptcy case number after the petition is filed in court. Both Chapter 7 and Chapter 13 bankruptcy can stop wage garnishments from happening.

Bank account levies are similar to wage garnishments except there is no employer involved. This collection activity will allow the creditor to collect directly from your bank account if they have a judgment against you. If these funds in the bank account are the last of your resources, you may use bankruptcy to save your assets and block a bank levy from happening. As soon as your petition is filed, you can use the case number and the automatic stay provision to halt the bank account levy and cease any further collections. Even if it has already started and one levy has happened already, it does not mean that they will stop from doing it again. It is entirely possible for them to engage another bank levy if the debt amount has not been cured.

Repossessions are a common practice when an automobile is no longer being paid for. This type of collection activity can be postponed with a bankruptcy. Since bankruptcy protection generally stops all collections activities via automatic stay provision, the repossession of an automobile or a motorcycle will be postponed until the automatic stay provision is removed which is usually at the end of a bankruptcy. You can use the extra time from bankruptcy protection to plan a pick-up date for the repossession so that you know exactly when and where the vehicle will be surrendered and picked up. Otherwise, you will just be dodging the repossession company and may lose possessions that are in the car when it is picked up. Bankruptcy can help organize the ordeal so that you do not unexpectedly lose your vehicle when you need it. The protection from a repossession begins as soon as your bankruptcy petition is filed and a case number is provided to you.

 

Bankruptcy Law Professionals is a bankruptcy law firm with office locations in Orange County and Riverside.  We offer free consultations in-office or by phone.  Contact us at 855 257-7671 to schedule an appointment for consultation.

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