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What does the automatic stay in a bankruptcy do?

On Behalf of | Aug 25, 2020 | Bankruptcy

By the time someone opts to file for bankruptcy protection, they have probably been dealing with considerable collection attempts from their creditors. Many understand that the bill collectors are just trying to collect what’s due on an account, but this is often a traumatic experience for a person who doesn’t have the money to spare.

Once a person comes to the conclusion that they aren’t able to cover their bills, they may realize that it’s time to file bankruptcy. One of the benefits of making this financially responsible decision is that the court will issue an automatic stay as soon as the case is filed. 

The automatic stay is an order from the court that prevents creditors from trying to collect money from you during the bankruptcy. They can’t call you, send bills through the mail, email you, or use any other form of communication to try to get money out of you. 

The prevention of collection attempts is important because it protects both the rights of the person filing for bankruptcy protection and the rights of the creditors. It effectively prevents unscrupulous creditors from bullying a debtor out of their available cash or taking more than their fair share of any assets the debtor may have to distribute. Bankruptcy laws cover specific requirements for how creditors are paid in a bankruptcy. When they attempt to collect outside of the court, it goes against those requirements, so the automatic stay is a critical component in these cases. 

When you’re ready to file for bankruptcy, you must ensure that everything is in order. Your attorney can help you to do this so that you can get the case moving forward as quickly as possible. This enables you to have the fresh financial start that you need.