Bankruptcy Basics: The Benefit of the Automatic Stay

TRI Writer • July 24, 2019

No one deserves to be afraid to answer their phone or check their mail or open their front door to an unexpected arrival. If creditors are harassing you, you will be relieved to know that there is a way to put a stop to the harassment. Bankruptcy is a legal process put in place by America’s founding fathers to protect people just like you from this exact problem. One of the most immediately apparent benefits is the automatic stay that goes into effect immediately upon filing your bankruptcy petition with the court.

How Does the Automatic Stay Benefit Tennessee and Georgia Bankruptcy Petitioners ?

  1. Stops vehicle repossessions
  2. Stops the eviction process
  3. Stops the foreclosure process
  4. Stops collector calls, letters, etc.
  5. Stops wage garnishment
  6. Stops the disconnecting of utilities
  7. Stops limited tax actions

The automatic stay is designed to offer relief to debtors who are in the process of filing for bankruptcy. As soon as the bankruptcy petition is filed with the court, the automatic stay goes into place. Creditors and collectors are alerted of the bankruptcy filing, and the vast majority of collection action must immediately halt. The basis of the automatic stay is simple. Once you file for bankruptcy, most all creditors have to leave you and your stuff alone. they can’t sue you; call you; send you messages; continue automatic drafts; or foreclose or keep your car that was just repossessed. There are a fair number of narrow exceptions that do apply so you need to stay in touch with your qualified consumer Bankruptcy Lawyer specialist to see if they fit within the narrow exception. if not, then they are responsible to pay your damages and attorney fees for defending against these stay violations.

If creditors are harassing you and you need help, please get in touch with the law offices of Kenneth C. Rannick P.C. Our Tennessee and Georgia Bankruptcy Lawyers have the knowledge and experience to help you get on the road to recovery.

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January 30, 2024
Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses?  In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.

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