On Behalf of developers | May 13, 2023 | Bankruptcy
People who are drowning in debt often wonder how they’ll make ends meet. Just knowing that they owe money is stressful enough, but having the creditors try to contact them constantly adds more stress. Once someone realizes they need to take the step of filing for bankruptcy, they should learn about the protections that this opportunity affords.
The bankruptcy court will issue an automatic stay when you file. This protection prevents creditors from trying to collect money from you while your case remains active. With very few exceptions, you won’t have to worry about creditors trying to contact you for money while you’re working to resolve your bankruptcy case. They also can’t take steps like placing liens against property or garnishing wages while the automatic stay remains in effect.
The automatic stay isn’t set just for the person filing for bankruptcy. It’s also meant to even the playing field for the creditors who are part of a case. The chance of a creditor receiving everything they’re due in a bankruptcy is small. Without the automatic stay, the creditors could try to circumvent the bankruptcy trustee to collect more than they should actually receive.
With that said, the automatic stay also affords filers time to reach favorable resolutions with creditors that are willing to deal.
There are some limits to the automatic stay. These include the collection of any debt that’s not dischargeable in bankruptcy. For example, you could still get calls about having to pay child support payments because those debts aren’t dischargeable in a bankruptcy proceeding.
Making sure you understand your rights and responsibilities that come with filing bankruptcy will be beneficial for you. Working with a legal professional who understands your situation can help you to make decisions that are in your best interests as you take this important step toward a fresh financial start.