What is the “Means Test” in Bankruptcy?
For many individuals facing debt, their primary concern is keeping their home and other important possessions. Fortunately, once you file for bankruptcy, it will trigger something known as the “automatic stay,” which prevents creditors from pursuing all collection efforts until your bankruptcy case is resolved, effectively allowing you to remain in your home. If you’re facing significant debt and are considering filing for bankruptcy, please don’t hesitate to contact our skilled South Dakota bankruptcy lawyers to learn more about the automatic stay and how we can guide you to your safe harbor.
The automatic stay is one of the most powerful tools available to individuals seeking relief through bankruptcy. As soon as you file your bankruptcy petition, the court imposes this legal injunction, effectively halting creditors from continuing any collection activities. This means foreclosure proceedings, wage garnishments, repossessions, and harassing phone calls must stop immediately.
The automatic stay provides a much-needed breathing space, giving you the opportunity to reorganize your finances under Chapter 13 or liquidate your debts under Chapter 7 without constant pressure from creditors. Our experienced South Dakota bankruptcy lawyers can help you understand how the automatic stay applies to your unique financial situation and ensure its protections are enforced.
The automatic stay takes effect the moment you file your bankruptcy petition with the court. This immediate protection requires no additional actions or approvals. Once the petition is filed, creditors are notified of the stay, and they must cease collection activities. Even if a creditor is unaware of your bankruptcy filing, they can be held accountable for violating the automatic stay once notified.
Timing is critical when dealing with creditors, and filing for bankruptcy at the right moment can make all the difference in protecting your assets and financial stability.
While the automatic stay provides broad protection, it does have certain exceptions. Most creditors, including credit card companies, mortgage lenders, and collection agencies, must cease their efforts to collect debts. However, not all obligations are covered under the automatic stay. For example, it does not stop actions related to child support, alimony payments, or criminal proceedings.
Additionally, some secured creditors may request relief from the stay to proceed with foreclosures or repossessions in specific circumstances. Understanding which creditors are bound by the automatic stay and which are not can be complex, but our knowledgeable bankruptcy attorneys will work with you to clarify these distinctions and protect your rights.
Don’t go through the bankruptcy process alone–having a skilled team of attorneys in your corner can make a world of difference. 605 Bankruptcy has years of experience representing individuals just like you, and we stand ready to put that experience to work for you in your case, too. Contact us today to schedule a free initial consultation with our firm.
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