What Does "Bankruptcy Protection" Actually Mean?

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Your Protections When Filing For Bankruptcy

Bankruptcy Law is Federal Law and Will Protect You

Bankruptcy law prevents economic enslavement and 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.

Bankruptcy law is Federal Law and 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 the 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 judgment 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 judgments against Debtors in Bankruptcy. Any state court lawsuits or judgments against them become legally unenforceable.

How Is a Debtor Protected in Bankruptcy From the Moment of Filing?

The moment a bankruptcy case is filed, the debtor is protected by the Automatic Stay [11 USC 362]. It 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, Facebook, 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.

What Are the Consequences of Violating the Automatic Stay?

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
  • Attorneys Fees

What Does Bankruptcy Actually Protect?

In the end, bankruptcy truly protects your 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 underserve them throughout their lives until their shortened work years are over.

The Stigma Around Bankruptcy

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 the freedom to start over. Why? Because capitalism involves risk. Without risk, there is no gain, no economic progress - only Economic Stagnation.

Facing Debt? Call an Oklahoma Bankruptcy Lawyer at (405) 725-1441

At Alexander Hilton & Associates, we are backed by years of experience. We have guided individuals toward a debt-free life since 1990. If you have struggled with debt, we can help you explore your options. At our firm, we offer the services below.

If you are considering filing, contact us online or call to schedule a free consultation today!

To learn more about how filing for bankruptcy can protect you as a debtor, contact our Oklahoma City bankruptcy lawyers at Alexander Hilton & Associates  online or call (405) 725-1441. Your initial consultation is free!

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