What Does it Mean to Enter Bankruptcy Protection?

The bankruptcy process can be long and confusing. However, one of the most relieving aspects of filing for bankruptcy for debtors is the relief from creditors. From the time your bankruptcy filing enters the court, you will enter bankruptcy protection.

Bankruptcy protection describes the process through which you make your payments to pay off your debt and keep your assets. Regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy, if you stick to the court-ordered payment plan, then creditors are not allowed to enter more claims against you. In short, bankruptcy protection means that you will be allowed to protect your assets and way of life from creditors.

As a result, one of the most important aspects of bankruptcy protection for debtors is the automatic stay against foreclosures, lawsuits, calls, and all other advances by creditors. Again, once you have filed for protection, then creditors are no longer allowed to try to collect outside of the court-ordained process, as long as you complete the necessary requirements along the way. If you break from the court’s plan – in particular, during the Chapter 13 process – then you no longer have bankruptcy protection, so it is important to stay up on your schedule.

The most important facets of the bankruptcy process are honesty and commitment. If you report your assets and income correctly in order to enter the right kind of bankruptcy and tell the court your situation, then the court will attempt to do what is best for you. If you go through the payment process according to the court’s schedule, then you will keep your protection throughout the process and exit bankruptcy in a better situation than when you entered. Similarly, if you stick to your new budget for the duration of the period in which bankruptcy is on your credit report – ten years for Chapter 7 and seven years for Chapter 13 – then it will pay off in the end with a better credit score and budget.

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Graham Billings

Graham Billings is a senior at the University of North Carolina at Chapel Hill with a double major in Economics and Political Science. He plans to graduate in December of 2009 and then attend law school in the fall of 2010. He is a member of the Economics Club at Carolina, which brings in speakers and hosts events in order to discuss current economic issues and help those who do not have a background in economics become more familiar with it. He is a National Merit Scholar and Dean’s List recipient. He is originally from Greensboro, North Carolina and attended the Early College at Guilford for high school, taking classes at Guilford College. In addition to economics, his academic interests include the legal and political system. He headed the only student-run, high school-level Honor Court in high school and participated in a national model Congress in San Francisco, run by Harvard students, and won awards of excellence for his work on the mock Supreme Court. Additionally, he tutors Carolina students in economics on a volunteer basis.

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