Bankruptcy contains many parts, but one of the most powerful tools built into the U.S. bankruptcy code is what’s called the Automatic Stay.
The Automatic Stay is a court order that generally takes effect as soon as you file bankruptcy, whether it’s a Chapter 7 bankruptcy or a Chapter 13, and lasts for the entirety of your bankruptcy case.
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The Automatic Stay freezes any and all collection efforts by creditors for any debts included in the bankruptcy filing. This means that the Automatic Stay is designed to stop:
While the protections of the automatic stay only apply during your case, by the time you emerge from bankruptcy your debts should be addressed in court, and your creditors must respect these rulings.
In other words, once a debt is settled through bankruptcy, your creditors may not try to collect. If they do, they will be in violation of the law and could be sued.
Because the Automatic Stay is designed to protect you throughout your case, you should be able to focus on getting control of your debt instead worrying about stressful, harassing phone calls.
Right now, for example, you may be trying to figure out how to make your mortgage payment and your credit card payment, all while avoiding nasty calls from creditors.
But a filing under Chapter 13 bankruptcy may help you ease your worry about foreclosure or juggle the needs of multiple creditors. As part of the Chapter 13 repayment plan you establish, you would simply make one monthly payment to your bankruptcy trustee who would then deal with your creditors.
Throughout this process, you’d be protected by the Automatic Stay until you emerge from bankruptcy ready for a fresh start.
Each year, huge numbers of people lose their homes to foreclosure. But it doesn’t have to be this way. There are tools available, like the Automatic Stay, which may help you keep your home.
If you’re ready to prevent foreclosure and take advantage of the Automatic Stay’s protection, speak with a local bankruptcy lawyer about starting the process. At this time you can ask questions about how the laws might help stop foreclosure of your home.
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