Creditors typically sue in general sessions court to collect their debts.  Once a judgment is obtained, the creditor can garnish your paycheck, or levy all the money in your bank account.  More infrequently, they can pick up assets you may have such as a car.   The filing of a bankruptcy stops these collection lawsuits and prevents the garnishment of your wages or bank account.

If you owe for a vehicle (car, motorcycle, boat, or UTV) or other such item, the creditor with a lien on it can simply repossess the item. The “repo man” simply finds the car and takes it while you aren’t looking – from your driveway at night or the parking lot of your workplace, or any other place they can find it. By filing bankruptcy, you stop the repossession because the bankruptcy law imposes an “automatic stay” by operation of law the prevents the repossession. IF THE VEHICLE HAS ALREADY BEEN REPOSSESSED, the bankruptcy court can usually order that the creditor release the vehicle to you.

In the state of Tennessee, the bank or mortgage company who has the mortgage on your home can start a foreclosure procedure to sell your home on the steps of the courthouse of the county in which you live on a specified date and time. The date of this "foreclosure sale" must be advertised for three consecutive weeks in a local newspaper, and a notice must be sent to you by the bank or mortgage company telling you the date of the foreclosure sale. Before the foreclosure sale is even set, the bank or mortgage company must send you a demand or notice letter declaring the entire debt due and demanding payment in full. The notice letter is often sent before the date of the foreclosure sale is set. The filing of a bankruptcy STOPS a foreclosure sale before it occurs.

WARNING, if the foreclosure sale has already taken place, you cannot get it back by filing bankruptcy after the fact. It is too late. To stop a foreclosure, a bankruptcy MUST be filed before the foreclosure sale date.

If a creditor has taken you to court (typically general sessions court) and received a judgment against you, then that creditor may send a notice of garnishment to your employer, who is required by law to withhold approximately 25% of your take home wages from you and send it to the Court, who in turn must send it to the creditor. The filing of a bankruptcy stops any garnishment from happening, anywhere in the process. If the garnishment is about to happen, it is stopped by the “automatic stay” of the bankruptcy law. If the garnishment is currently happening, meaning the creditor is currently taking the money out of your paycheck, the filing of a bankruptcy will stop any more money from being taken from you.

It is very common for bill collectors to call you on the phone repeatedly asking or demanding payment. These calls are designed to make you do one thing – voluntarily make a payment to them. Even if you explain your circumstances to them and why you cannot pay, they will keep calling. The filing of a bankruptcy will STOP all collection phone calls. After you file bankruptcy, the automatic stay provisions of the bankruptcy code prevent creditors from continually calling you demanding payment. If they do, and the bankruptcy court finds that they have intentionally done so, you could be awarded damages.