Debt Collection During Bankruptcy

• Your application for bankruptcy creates what is known as the "automatic stay." This means debt collectors, including mortgage lenders, are barred by the court from pursuing collection practices against you while your bankruptcy filing is processed. This allows you to focus on preparing for hearings in accordance with your bankruptcy proceedings without fear of being removed from your home or losing other real property like your car.
  
  

Exemptions for Bankruptcy Liquidation

• If you filed for Chapter 7 bankruptcy protection, some of your assets may be liquidated by the court to pay off your debts. Federal and state bankruptcy laws allow you to exempt a portion of equity available in your home from the liquidation process. This can allow you to retain your home with other exemptions helping you retain possession of other real assets like an automobile. Exemptions for real property vary widely by state. For example, Florida allows a consumer to exempt 100 percent of his home while Indiana allows a homestead exemption of only $15,000.
  
  

Bankruptcy Repayment Plan

• If you filed for Chapter 13 bankruptcy restructuring, you may be able to retain all your assets including businesses and your home. Your retention of these assets is contingent on the court approving your bankruptcy repayment plan. This plan is required to show your financial ability to make timely payments on your debts and pay them down within a three to five year time span. If your plan is approved, your mortgage lender or deed of trust holder is barred by the court from seizing your property as long as you continue to make timely payments in accordance with your repayment plan.
  
  

Bankruptcy Denial

• If your proposed bankruptcy is denied by the court, foreclosure proceedings and all other legal actions to collect your debts may resume unabated. Your bankruptcy can be refused for a number of reasons from errors in your filing paperwork to giving misleading evidence to the court about your financial status or number of assets in your possession. It's important to retain a bankruptcy attorney to assist you in navigating the complicated legal procedure that is bankruptcy so you can maximize the likelihood your bankruptcy is approved.