Mark T. Young & Associates
Free Initial Consultation:
423-933-1606
888-376-0282(Toll Free)
423-933-1606
888-376-0282
Focused On Your
Financial Freedom

How bankruptcy can impact credit card debts

Many people in Chattanooga and Eastern Tennessee who wonder about filing a petition for bankruptcy are struggling under a mountain of credit card debt. They may have heard that bankruptcy offers protection from credit card companies that are trying to collect on these delinquent accounts, but they don't understand the process and may be skeptical about whether a bankruptcy petition will offer any protection. Any question about bankruptcy can be answered only with reference to the specific financial situation of any given person. But, a bankruptcy petition will bring all collection actions to a stop until the bankruptcy proceeding is complete. This is known as the "automatic stay."

Bankruptcy is intended to give financial relief to people who cannot manage their debts. The automatic stay is instrumental to achieving this end. When a petition for bankruptcy is filed under Chapter 7, Chapter 11 or Chapter 13, the court where the petition is filed issues an order to all creditors identified by the person who filed the petition directing that all collection proceedings stop immediately.

The order is called a "stay" because it stops - or "stays" - collection actions. The effect of the stay is not limited to pending court actions. It also applies to collection proceedings, such as the mailing of demand letters, garnishment of wages and collection phone calls. If a creditor should violate the stay by continuing efforts to collect the debt, it may face contempt proceedings or other penalties imposed by the court.

The stay remains in effect until the bankruptcy proceeding is concluded. The debtor can use this time to negotiate with the creditors about reducing the amount needed to pay the debt or extending the deadline for payment. If the debtor has filed a Chapter 7 petition, all of the credit card debts may be discharged. If the debtor has filed a Chapter 11 or Chapter 13 petition, the final order will embody any agreements reached by the debtor and one or more creditors.

No Comments

Leave a comment
Comment Information

Get Started Today

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Contact Information

Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
Fax: 423-877-0363
Hixson Law Office Map