In some cases, an individual may wish to file for an emergency bankruptcy filing to stop further processes of wage garnishment, foreclosure sheriff’s sale, and more. Some are under the impression that if you receive notifications of foreclosure, for example, it’s too late to react. This assumption isn’t always the case.
An effective bankruptcy filing can initiate an automatic stay. According to Investopedia, an automatic stay is “a provision in the United States bankruptcy law that temporarily prevents creditors, collection agencies, government entities, and others from pursuing debtors for money that they are owed.”
An automatic stay goes into effect the minute a debtor files for bankruptcy and applies to individuals and businesses alike. The process can protect the debtor from liens, repossessions, and more.
Why Would an Emergency Bankruptcy Be Necessary?
If you are facing foreclosure on your home, repossession of collateral, or garnishment on your wages that would result in financial distress, you may wish to pursue an emergency bankruptcy. A regular bankruptcy requires gathering thorough information regarding debts and their contact information, eligibility requirements, and more, which can take a significant amount of time.
If you file an emergency bankruptcy, you can shorten this process tremendously and submit the required paperwork later, typically within fourteen days. This timeline allows you to receive immediate and necessary relief while providing some extra wiggle room to finalize the paperwork. It’s important to note that your bankruptcy may be halted if you don’t follow through and get the necessary documentation done in fourteen days.
What Are the Required Documents For An Emergency Bankruptcy Filing?
The first step is to file an emergency bankruptcy petition, citing the valid reasons that you are in need of immediate relief. In most cases, the automatic stay can be granted within 24 hours or shortly after that, providing the debtor with some immediate breathing room.
The debtor can apply to waive the initial fees if they are in a dire situation, or they can typically pay the fee in installments.
The next step is to gather the creditor information, including addresses, amounts due, and any other relevant information. This requirement may vary based on location, so it’s best practice to speak with your legal adviser for bankruptcy cases in Indianapolis to ensure that you are gathering the necessary documentation and not holding up the process by leaving out important information.
In most cases, debtors may also request that the credit counseling requirement be waived temporarily. This waiver can buy additional time, although the debtor may be required to go back and complete the credit counseling before the bankruptcy is finalized.
Next Steps Typically Required Within Fourteen Days
Typically, after an emergency bankruptcy is filed, the courts will require that you finalize the rest of the paperwork, which could mean supplying extensive information regarding your income or other assets. A list of expenses typically incurred each month to determine the net amount of income and any additional pertinent information, such as updated statements on investment accounts and more.
The debtor may also be required to complete a credit counseling session or undergo other debt management courses based on the jurisdiction in which they live.
It is imperative that the debtor supply all required documents and complete all assigned tasks within the timeline, or they risk having their bankruptcy dismissed without discharging any debts. This dismissal can lead to the debtor incurring additional fees to reopen the bankruptcy case or, worse, being denied ever being able to enter the bankruptcy process again if the courts feel the debtor is abusing the bankruptcy process.
Disadvantages of Emergency Bankruptcy Filing
Though an emergency bankruptcy has apparent advantages during dire situations, it has disadvantages, too.
Not all debtors will be eligible for an emergency bankruptcy. Those who have filed for bankruptcy in the past may be restricted from an emergency filing for a period of time or ever again, based on previous bankruptcies. In some cases, the debtor may still be granted the opportunity to file for emergency bankruptcy but will be placed under stricter limitations than if they didn’t have a previous bankruptcy in their history.
After the bankruptcy, the debtor may still be forced to pay off certain debts that can’t be discharged, such as spousal or child support. With the timeline being escalated, this can mean that the debtor won’t have as much time to arrange for payments of non-dischargeable debts.
Finally, though the timeline is escalated, which can be appealing to those with emergent issues, some courts will require additional paperwork or stricter guidelines to achieve the automatic stay. Making these requirements may seem unfair, but the courts are trying to unnecessarily protect those looking to benefit from the emergency bankruptcy option.
Compassionate and Capable
Our office treats everyone we work with and work for as if they were our relatives. We understand and respect how sensitive and frustrating the time for bankruptcy can be, and we don’t judge or look down on you; we simply want to help you in the best way we can.
No matter the size, every client’s case becomes a priority for our office. We work together fluidly to ensure that our clients are taken care of and are communicated with every step of the way.
We can ensure that you meet the required deadlines and remain compliant throughout the process, giving you the best shot at completing a successful bankruptcy so you can recover your credit and look forward to a more financially stable future.
Contact our office today at (317) 623-4546 to get started.