How does an automatic stay work in bankruptcy?
One of the most irritating things when you owe money to a business is getting the calls or letters saying that you need to pay them. Your nonpayment probably isn’t because you don’t want to pay them, but rather because you can’t.
When you realize that you just can’t make ends meet and pay your creditors, you may decide that you’re going to file for bankruptcy. You might be happy to know that once you file, you won’t have to worry about the calls, letters, and other collection attempts from debt collectors.
Automatic stay protections
The court will issue an automatic stay when you file for bankruptcy. This prevents creditors from making any collection attempts. This means that you won’t have to deal with all that any longer. You’ll be able to check the mail and answer the phone without worrying about creditors. If they try to contact you, remind them of the bankruptcy and let your attorney know about the call.
The reason for the automatic stay is simple. It puts creditors on an even platform to collect money. Most creditors won’t receive full payment for your account with them during bankruptcy proceedings. Since they can’t try to collect outside of the court, they won’t have an unfair advantage over any other creditor.
Your attorney can discuss the automatic stay and other benefits of bankruptcy with you. It’s important to be sure that you also discuss your responsibilities with your lawyer so that you can meet those.