The Rock-A-Way building in York Beach is two-thirds of a country away from any of the Zuckerberg bankruptcy law offices, but what’s going on there is a great example of one of the most important benefits included in the new bankruptcy laws of Indiana: the bankruptcy automatic stay.
“A foreclosure auction scheduled for the Rock-A-Way building at 6 Main St. in York Beach was postponed May 8 after a bankruptcy filing,” the story in seacoastonline begins.
Here’s what I want my Bankruptcy in Indiana readers to understand, and what reporter Susan Morse goes on to explain to Seacoast Online readers:
In a Chapter 7 bankruptcy, the kind filed by Rock-A-Way, the debtor’s assets are sold to pay creditors who loaned money to the business. Sometimes, an auction is used to sell those assets.
What happened in York Beach, though, was that the auction had been scheduled as part of a foreclosure on the mortgage loan on Rockaway’s building. The mortgage lender was the party that had planned to sell assets in order to get money back, since Rock-A-Way had defaulted on making the mortgage payments.
- As every good bankruptcy attorney in Indiana knows, though, the moment a bankruptcy is filed (in any state, by anyone), an order goes out from the bankruptcy court to all creditors, telling them to hold off! Creditors can’t call debtors, can’t send letters, can’t file lawsuits, can’t repossess, and – they can’t foreclose! That’s what I mean when I say that the automatic stay helps stop foreclosure.
Even though this particular case happened in another state, and even though a large company was involved, the automatic stay under the new bankruptcy laws of Indiana has the exact same effect. And that “stop sign” effect holds true whether we’re talking about individual bankruptcy in Indiana (whether it’s under chapter 7 or Chapter 13 bankruptcy law in Indiana) and even when it comes to small business bankruptcy in Indiana.
As my colleague the Columbus bankruptcy lawyer explains to her clients, even though secured debt such as a mortgage cannot itself be discharged through bankruptcy, bankruptcy does help stop foreclosure. As a longtime debt consolidation lawyer who’s been offering Indiana bankruptcy services for more than 25 years, I know. It’s the automatic stay that’s the secret!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg