Definition of Bankruptcy Protection

Bankruptcy protection stops collection activity.

Bankruptcy protection is one of the primary benefits to a debtor when filing bankruptcy. It automatically stays, or stops, creditors from continuing any collection activity and allows you time to improve your financial situation through the bankruptcy process.

Automatic Stay

The term "bankruptcy protection" refers to the automatic stay put in place when you file bankruptcy.

Collection Activity

Bankruptcy protection stops all collection activity from creditors, such as harassing phone calls and letters.

Repossessions and Foreclosure

The automatic stay also stops repossessions and foreclosure proceedings on your secured property.

Bankruptcy Protection Ends When the Case Ends

The protection of the automatic stay ceases when the case is successfully completed or is dismissed.

Monetary Award

If a creditor violates the bankruptcy protection, a debtor may be entitled to a monetary award. First, a demand letter is sent to the creditor explaining the violation, and then an adversary proceeding may be filed.

References

• Cornell University Law School: 11 U.S.C § 362. Automatic stay