An Explanation Of The Automatic Stay In Bankruptcy Cases

One of the top things that lead people to consider bankruptcy is creditor harassment. The phone keeps ringing with calls from creditors wanting money. Unfortunately, when you have no money to pay your bills, your creditors will not be happy. If you are in this position, filing for bankruptcy can bring some relief through the automatic stay. Here is an explanation of what this is and how it works in a bankruptcy case.

It Is an Order to Your Creditors

It often takes several weeks to prepare and file all the required bankruptcy documents needed for a case. Once filed, the court receives the papers and immediately issues the automatic stay. They issue it by notifying every creditor listed on your bankruptcy documents that you are in the middle of bankruptcy proceedings. When your creditors receive this notification, they must update your file to reflect this order.

You can expect your creditors to receive the order within about a week of filing your bankruptcy documents. Therefore, within approximately one week, you should not receive any correspondence from your creditors.

What the Automatic Stay Requires of Your Creditors

The automatic stay is an injunction provided by the bankruptcy court that stops your creditors from trying to collect the money you owe. This injunction does not prevent them from collecting your debt forever. Instead, it gives you time to work through your case to reach a settlement and agreement for all your debts.

The bankruptcy court is responsible for determining what happens to your debt. If the court discharges your debts, the balances drop to zero, and your creditors cannot try to collect the money ever. The debt is gone, and you no longer owe it.

There is also a chance that your bankruptcy case will not discharge the debt. If this happens, your creditors can try to collect it once the court lifts this injunction.

The Benefits It Offers

The automatic stay offers benefits to people who file for bankruptcy. The primary benefit is that they can receive relief from creditor harassment. If your phone rings nonstop with calls from your creditors, you will find relief when the court issues the injunction, as your phone will stop ringing. You will not have the pressure of your creditors asking you for money, which is a huge relief.

To learn more about bankruptcy or the automatic stay, contact a local bankruptcy lawyer to set up a consultation visit.