People who file for bankruptcy are often sick and tired of having to deal with creditors. They may be scared to answer the phone and may dread checking the mail. Some may even be wary of texts and social media messaging since debt collectors can contact them there, too.
Once the bankruptcy is filed, the court issues an automatic stay. This is a court order that forbids creditors from taking any steps to collect the balances due on the accounts. It puts a halt to all calls, messages, letters, and in-person contact.
Why does the court issue an automatic stay?
The chance of all creditors in a bankruptcy case getting the full balance due isn’t likely. Because of this, the court has to prevent creditors from trying to skirt around the law. Once the automatic stay is in place, the creditors have to wait to determine how much they’re going to receive as part of the bankruptcy.
For the filer, the automatic stay gives them a chance to focus on their finances without being concerned about creditors. All those creditors will be taken care of in accordance with the law. This puts them all on a level playing field.
Anyone who’s drowning in debt should learn their options through bankruptcy. Most consumers can choose from either Chapter 7 or Chapter 13, depending on their circumstances. Working with someone familiar with these matters is important to ensure their rights are respected and they’re meeting their responsibilities.
