It can sometimes be necessary to file a bankruptcy application quickly- creditors may be breathing down your neck, and you may be in immediate risk of losing your home, vehicle or other valuable assets. Many people know that bankruptcy can be a way of obtaining an automatic stay, which prevents creditors from seeking collections from a debtor when a bankruptcy hearing is underway.
Filing for emergency bankruptcy may be an option for some debtors seeking immediate relief from debt collection efforts by creditors. Emergency bankruptcy is sometimes called “bare-bones” filing or “skeletal” filing, as it presents a streamlined process involving only the bare details for a bankruptcy filing.
An emergency bankruptcy filing can sometimes provide immediate legal relief within the same day, or even within a few hours. However, they can be difficult to obtain due to restraints by newer bankruptcy rules that have been placed on both the creditor and debtors. Filing for emergency bankruptcy is different from “rush filing”, which might not involve an automatic stay, but rather an expedited processing of papers.
When Can an Emergency Bankruptcy Filing Be Used?
A debtor can file for emergency bankruptcy when:
- An automatic stay is needed immediately
- The debtor can’t wait to complete many of the standard bankruptcy forms
- The creditor has initiated action against the debtor and the debtor faces an imminent risk of losing their property (i.e. the debtor has filed suit or is trying to enforce a lien on the property)
Thus, filing for emergency bankruptcy can help the debtor obtain an automatic stay to stop lawsuits, foreclosures, wage garnishments, seizure of bank account funds, and other methods that a creditor might attempt in order to collect on a debt.
How Does a Debtor File for Emergency Bankruptcy?
First the debtor needs to file a petition with a bankruptcy court. Depending on the jurisdiction, this can be called by different names, such as a “Voluntary Petition”, or an “Emergency Petition”. Once the debtor files the petition, the court usually grants the automatic stay within the same day, which is enforceable immediately. In other words, all the creditor has to do is file the petition, and then the creditor can’t continue their debt collection efforts without facing legal penalties.
After the emergency petition is filed with the court, the debtor then has a certain time period to complete the other bankruptcy forms and papers. For example, they may need to submit other forms such as a “Statement of Social Security”. Depending on the jurisdiction, the debtor and their lawyer have anywhere from 2-15 days to submit the required documents. If they can’t complete the other forms within this time period, their emergency bankruptcy claim will be dismissed.
What are the Benefits and Limitations of Emergency Bankruptcy Filings?
Some benefits of filing for emergency bankruptcy may include:
- It allows the debtor to claim the protections of an automatic stay
- May stop collection actions against the debtor, including foreclosure and/or repossession
- In some cases, allows the debtor some time to reclaim possession of property while the bankruptcy proceedings are underway
Some limitations of emergency bankruptcy filing include:
- Some debt is non-dischargeable, meaning that the debtor will still owe on the debt even after a bankruptcy hearing
- The debtor still needs to provide the documents requested by the court (i.e., can’t just file for emergency bankruptcy and then abandon the claim)
- The debtor will still need to undergo mandatory credit counseling
- Not all debtors may be eligible to file for emergency bankruptcy, and many restrictions may be placed on those who have filed for bankruptcy in the past
Do I Need to Hire a Lawyer for Help Filing for Emergency Bankruptcy?
It may be necessary to hire an experienced bankruptcy lawyer in your area if you are considering filing for emergency bankruptcy. Your attorney can help determine whether you are eligible for emergency bankruptcy. If so, they can assist you throughout the process and can represent you in court during hearings.