When a debtor files bankruptcy, creditors have several duties imposed upon them by the bankruptcy court. One of these duties is to stop the collection of income and to return any income that was collected after the bankruptcy petition was filed. For example: If a creditor received a judgment against you and began garnishing your wages after you filed bankruptcy, the creditor would be required to return the money they garnished. This would also apply to money taken from bank accounts or other assets.
After a debtor files bankruptcy the creditor is also required to halt all scheduled sales of assets. For example, if your home is in foreclosure and the mortgage lender has scheduled an auction, the creditor must stop the auction after you file bankruptcy. In the case of a vehicle, the creditor must also stop all repossession efforts after the debtor files for bankruptcy.
It is up to the creditor to take whatever action is necessary to stop the garnishment of income and sales of assets once a debtor has filed bankruptcy. Talk to a bankruptcy attorney about any pending actions against you such as wage garnishments , foreclosures and repossessions to find more about out how bankruptcy can stop these collection efforts.
