People who file for bankruptcy often have considerable stress because of contact from creditors. Having to deal with calls, text messages and other communication from them can make it difficult to live a normal life.
Once a person realizes that their options for getting out from under the debts are limited, they may opt to file for bankruptcy. This is a legal way for them to take care of the debts so they can have a fresh financial start. As part of the bankruptcy process, the court will issue an automatic stay.
What is an automatic stay?
The automatic stay is a court order that forbids creditors from trying to collect the debts that are included in the bankruptcy. It can also halt other collection activities, such as foreclosures, garnishments, repossessions, utility bill shutoffs or evictions.
These can be temporary, and some creditors may file to have the automatic stay lifted so they can resume collection activities. In order for the automatic stay to be lifted, the court would have to approve it.
This court order is important because it puts all creditors on an even playing field. There’s a chance that none of them will be paid off completely through the bankruptcy, so the automatic stay ensures each creditor only gets their fair share.
If you’re considering filing for bankruptcy, it’s best to explore how this will impact your financial stability and future. Working with someone who’s familiar with the process may make it easier for you to determine if this is the option you want to pursue.
