Harassment from creditors is one of the most stressful things about knowing that you owe money. When this occurs, there’s a chance that you’ll look for ways to reclaim your finances. One option that you may consider is filing for bankruptcy.
When you file for bankruptcy, creditors have to stop trying to collect money from you because the court will issue an automatic stay. This can provide you with a reduction in stress and an opportunity to set up your finances in a way that enables you to have a better financial future.
What is the purpose of the automatic stay?
While the automatic stay provides obvious benefits for you, there’s an important legal reason why the court issues the automatic stay. There’s a good chance that creditors won’t receive full payments for the amounts due on the accounts. By taking away the opportunity for them to try to collect outside of the bankruptcy process, the court puts all creditors on a level playing field so that each one only receives what they’re actually due.
Once the automatic stay is issued, creditors are forbidden from all collection attempts, including emails, phone calls, mailed demands, text messages or in-person contact. If a creditor violates the automatic stay, they can face penalties.
The automatic stay is one of the protections you can receive during a bankruptcy. It’s critical that you fully understand your rights and responsibilities throughout the process. Obtaining the assistance of someone familiar with these matters may be beneficial as you use bankruptcy as a tool to gain a fresh financial start.
