Emergency Bankruptcy Filing
An emergency bankruptcy involves filing a “bare bones” or “skeletal” bankruptcy petition on an expedited basis. Many people file an emergency bankruptcy petition to receive the protection of the automatic stay. This page will give you an overview of emergency bankruptcy filings and the reasons for filing an emergency bankruptcy petition.
Emergency Bankruptcy Defined
An emergency bankruptcy is the filing of a “bare bones” bankruptcy petition (ie. a bankruptcy petition without the attached schedules and statements which can be filed up to 14 days after the filing of the bankruptcy petition). The bankruptcy petition itself is a short document that can be electronically filed with the bankruptcy court to initiate the bankruptcy process and invoke the protections afforded by U.S. bankruptcy law.
You can file bankruptcy today to stop foreclosure, wage garnishment, repossession and lawsuits. Call Sacramento Law Group today at (916) 596-1018 to receive a free consultation.
The Reasons For An Emergency Bankruptcy
There are several reasons for filing an emergency bankruptcy petition. Most commonly, an emergency bankruptcy petition is filed to invoke the automatic stay. Other reasons for filing an emergency bankruptcy petition include recovering transferred property and protecting after-acquired property.
The Automatic Stay Stops Wage Garnishment, Foreclosure, or Repossession
The most common reason for filing an emergency bankruptcy petition is to receive the protection of the automatic stay to stop wage garnishment, foreclosure, or repossession. To explain, the automatic stay in bankruptcy stops collection action to protect property of the bankruptcy estate. In practical terms, the automatic stay stops repossession, foreclosure, and wage garnishment. Consequently, someone suffering from a wage garnishment may initiate an emergency bankruptcy filing to stop the daily garnishment of their wages. Likewise, someone may file an emergency bankruptcy petition to stop foreclosure. The power of the automatic stay is unique to bankruptcy and one aspect that greatly benefits debtors.
Regain Transferred Property
In general, payments made on account of a debt within 90 days before bankruptcy are recoverable by the bankruptcy Trustee. (See Section 547 of the bankruptcy code). Of course, there are exceptions. For example payments of less than $600, or payments in exchange for new value, are not recoverable by the Trustee. Nevertheless, some transactions made within 90 days before bankruptcy are considered “preferential” and therefore recoverable (taken back) by the Trustee. Now, sometimes bankruptcy petitioners want their property to be recovered by the Trustee, and sometimes these bankruptcy petitioners speed-up their filing to make sure that the transfer took place 90 days before filing. Consequently, the recovery of preferential transfers can be a reason for filing an emergency bankruptcy petition.
Protect Your Property
Once a chapter 7 bankruptcy petition is filed with the court the debtor’s property acquired thereafter is usually not subject to repayment of their prepetition debts. Therefore, someone may speed-up filing bankruptcy to protect property they expect to acquire in the near future. However, some property acquired after filing is still liable if received within 180 days of filing. Specifically, inheritances, life insurance proceeds, and proceeds from a marital separation agreement received within 180 days of filing are brought into the bankruptcy estate. Consequently, some people who expect to receive inheritances, life insurance proceeds, or compensation under a marital separation agreement may file chapter 7 bankruptcy to start the 180 day period in the hope of receiving the right to receive these monies after the 180 days have passed.