Understanding Emergency Bankruptcy
Traditional bankruptcy can be a complicated process involving reams of records including lists of creditors, your debts and assets, proof of income, and meetings with a bankruptcy attorney who will go over your information and work with the courts to set a date for a judge to hear your case. Since court dockets can be stretched thin, your court date could be set for months in the future, and you could run the risk of losing hard-won possessions, including your home or a large portion of your paycheck.
In the case of an emergency bankruptcy, a person’s wages might be garnished so they don’t have enough money for living expenses, they may be facing a foreclosure or an eviction, their car might be at risk of being repossessed, leaving them without transportation to get to and from work, or creditors are beginning to use aggressive tactics to collect outstanding debt. The financial and emotional stress can be pressing, and knowing that a traditional bankruptcy may not be enough to save prized possessions can be soul-crushing, especially when debt is the result of an unforeseen set of circumstances such as an unexpected illness or accident.
When an emergency bankruptcy is filed, an automatic stay is put into place that stops creditors from taking action until you can gather together the paperwork needed for a traditional bankruptcy filing.
Why file for emergency bankruptcy?
In many cases, while you are attempting to pull together the information required to file for a traditional bankruptcy, creditors are filing the legal paperwork they need to take possession of your property. Emergency bankruptcy provides emergency protection and immediately stops creditors from taking any type of action against you. Collection calls will stop, you will not be served with eviction or foreclosure notices, and your wages will not be garnished.
Emergency vs. traditional bankruptcy
An emergency bankruptcy initially requires the introductory pages of a traditional bankruptcy, which begins the process, but most importantly, gets the bankruptcy process started to stop creditors from taking action. Emergency filing fees are more expensive than traditional bankruptcy, usually twice the price, but the fees are in place to cover the costs of asking the courts to expedite your paperwork in order to protect your assets.
After filing the emergency paperwork, the courts will allow a week to provide a list of creditors with your social security number, as well as another week to complete other necessary paperwork. Ultimately, you’ll still need to complete the same paperwork as you would when filing a traditional bankruptcy, but the emergency filing buys you enough time to protect your assets, so an unexpected event won’t leave you homeless or destitute.
Contact a Michigan Bankruptcy Attorney
At Maxwell Dunn PLC, we understand the stress that outstanding debt can cause and are prepared to help you file an emergency bankruptcy if that financial solution is right for you. For a confidential consultation to address your own personal situation, please call our offices at 1-248-246-1166.See all videos