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.
The most powerful protection bankruptcy provides is the automatic stay. This stops most creditor actions, including:
- Foreclosure
- Vehicle repossession and repossession of other property
- Wage garnishment
- Government tax liens and levies
- Creditor phone calls and other communication
- lawsuits
Creditor claims still exist, the automatic stay means, however, that creditors can take no action on their claims. Unsecured debt will generally be eliminated by operation the bankruptcy discharge. Secured creditors have additional rights and will have to be treated differently on a case-by-case basis.
