Bankruptcy law provides protection from creditors. Two Chapters of the Code, Chapter 7 and Chapter 13, are designed to free consumers from debt and provide them with a fresh start.
One of the most powerful forms of protection that bankruptcy provides to consumers is the automatic stay. Most creditor actions are prohibited by the automatic stay, including:
- Foreclosure of homes and other real property
- Repossession of cars and other personal property
- Wage garnishment
- Government tax liens and levies
- Phone calls by creditors
- suits brought by creditors
The claims of creditors will still exist, but they cannot take action to collect on those claims. Unsecured debts will usually be eliminated through discharge. Those creditors that have a security interest in property will be treated differently depending on whether you wish to keep the property.