Emergency Bankruptcy Filing
An emergency bankruptcy involves the filing a “bare bones” bankruptcy petition on an expedited basis. Many people who file an emergency bankruptcy petition do so to receive the protection of the automatic stay. This page will discuss what an emergency bankruptcy is and the reasons for filing an emergency bankruptcy petition.
Emergency Bankruptcy Defined
There is no formal definition of an emergency bankruptcy, and yet many bankruptcy lawyers will instantly understand what it is once they hear the term. In essence, 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 protections afforded by U.S. bankruptcy law.
You can file bankruptcy today and stop foreclosure, wage garnishment, repossession and lawsuits.
The Reasons For An Emergency Bankruptcy
There are several reasons for pursuing an emergency bankruptcy. Most commonly, an emergency bankruptcy is filed to initiate the automatic stay. Other reasons for filing an emergency bankruptcy include recovering transferred property; protecting after-acquired property from bankruptcy; and protecting inheritance, divorce, or life insurance proceeds from bankruptcy.
The Automatic Stay Stops Wage Garnishment, Foreclosure, or Repossession
The most common reason for filing an emergency bankruptcy petition is to receive the benefits of the automatic stay in bankruptcy and stop wage garnishment, foreclosure, or repossession. To explain, the automatic stay in bankruptcy stops collection actions 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 to stop foreclosure in Stockton. 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 (except for wages) is not subject to their prepetition debts. Therefore, someone may speed-up filing for 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 liable. Consequently, some people who expect to receive inheritances, life insurance proceeds, or compensation under a marital separation agreement may file for bankruptcy to start the 180 day period in the hopes of receiving the monies after the 180 days have passed.