What Does "Bankruptcy Protection" Actually Mean?

Posted By Alexander Hilton & Associates || 27-Aug-2015

Bankruptcy law is Federal Law. Bankruptcy Cases are administered in Federal Courts. The Bankruptcy Code is found in Title 11 of the United States Code. The United States Department of Justice administers all Bankruptcy cases.

State courts are subject to the orders of Federal Courts. Federal Court powers are superior to State Court powers. This is due to the Supremacy Clause of United States Constitution.

The Supremacy Clause is that provision in Article Six, Clause Two of the U.S. Constitution which mandates that state judges must follow federal law when a conflict arises between federal law and state law. The Supremacy clause establishes that the United States Constitution and the federal statutes (and treaties) are "the supreme law of the land". Therefore, Federal Laws are the highest form of law in the United States legal system.

Therefore, any lawsuit filed or judgement issued in or by any State court against anyone is automatically "stayed" by the Bankruptcy Court when that person files for Bankruptcy protection.

Bankruptcy Laws are powerful and carry heavy penalties if violated by creditors who try to enforce claims or judgements against Debtors in Bankruptcy. Any state court lawsuits or judgements against them become legally unenforceable.

A Discharge Order is granted to a debtor by a Bankruptcy court pursuant to 11 USC 727, It cancels the Debtor's obligation to repay the debtsforever and completely- even debts where a state lawsuit was pending or where a state court judgement was issued.

What Protection?

Bankruptcy law prevents economic enslavement. Bankruptcy protects those rights which we, the people, hold as self-evident, inalienable, God-Given rights: The right to be left alone, to pursue happiness and to enjoy the fruits of one's own labor.

The Automatic Stay” [11 USC 362]

The moment a Bankruptcy case is filed, 11 USC 362 operates to stay all lawsuits and all collection activity. Each Bankruptcy court automatically issues this order, known as the “Automatic Stay”, which immediately protects the filer from all collections, lawsuits, garnishments, foreclosures, repossessions, judgments or legal proceedings. Everything stops. Notice of the automatic stay order is mailed by the court to all creditors, lawyers and parties of interest seeking payment.

Once a Bankruptcy case is filed, creditors may not contact the Debtor by mail, phone, email, face book, text, invoice or even "friendly reminder". Creditors cannot sue you or continue any lawsuit against you. They may not garnish your wages or repossess any property.

Creditors who fail to comply with the Automatic Stay order can suffer severe penalties. Penalties include: Fines and Sanctions for contempt of a Federal Court Order, Punitive Damage Awards [to make an example of them for engaging in illegal & predatory collection practices], Court Costs and Attorneys Fees.

Thomas Jefferson filed. Abraham Lincoln filed. These men knew the law of this land and used it to protect themselves. They would have willingly paid their creditors if they had had the money. They could not pay and therefore acted rightly and morally by choosing Bankruptcy.

Bankruptcy is the correct and ethical thing to do when you cannot pay your debts. It is morally correct to provide creditors with notice of insolvency. It is fair and just to provide them notice, an orderly and transparent reporting of one's true financial condition through the filing of a petition and schedules which give evidence. Evidence of what? Of the reality that the debt cannot be paid and, therefore, the Debtor must be given freedom to start over. Why? Because capitalism involves risk. Without risk there is no gain, no economic progress - only Economic Stagnation.

Therefore, What does Bankruptcy actually protect?

Freedom. The human soul. The creative mind. Invention. Confidence. Hope. Ingenuity. Creativity. Work ethic. Human Dignity. The pursuit of happiness. Liberty and, if you met some of the poor people who I have had the honor of representing as Bankruptcy Counsel, you would know that Bankruptcy protects life itself. It protects the life of those who have literally worked themselves to death trying to satisfy predatory creditors who overcharge the poor under serve them throughout their lives until their shortened work years are over.

The origin of Bankruptcy is found in the Bible, Book of Deuteronomy, Chapter 15 "The Seven Year Release".

For more information on Bankruptcy Protection, contact us today!

Categories: Bankruptcy

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