Chances are you have heard that filing bankruptcy will force creditors to stop contacting you. However, you may be wondering how that’s possible and exactly what the process is. Commercials and advertisements don’t usually address these questions. So you’re left thinking it’s too good to be true. Well, it isn’t. The biggest benefit from filing bankruptcy is getting your debts discharged. The second biggest benefit is the automatic stay. This process is intended to provide you relief from creditors as soon as your bankruptcy is filed.When you file bankruptcy, notices are sent to all of your creditors stating that you have filed bankruptcy and reminding them that the stay has gone into effect.  As the name suggests, the stay is automatic upon the filing of your case and as a result your creditors are required to back off.  They cannot call you, send you mail, garnish your wages, sue you or foreclose on your house.  And if they have started any of these actions, they must stop immediately.

Even if they don’t receive a notice however, the stay is effective. If they violate the law by attempting to collect the debt, they are under obligation to reverse their actions. For example if your vehicle is repossessed after the petition is filed the creditor has to return it. If your home is in foreclosure or your wages are being garnished, the automatic stay will stop any further actions until your case is discharged.  Most violations are innocent. The wheels were in motion before the creditor was notified. In the rare case that a creditor intentionally ignores the automatic stay, they are subject to sanctions by a judge that can be used to pay the debtor’s legal fees.

The power of the automatic stay

The automatic stay is a temporary action that remains in place until your case has been discharged in a Chapter 7 case or for the duration of a Chapter 13 case where you make payments over a period of three to five years.   The automatic stay does not apply to any new debt that incurred after your file bankruptcy and it does not stop your requirement to pay child support or alimony as part of a divorce.    For many people, the automatic stay can ease the stress and pressure they feel from financial hardship. Mounting debt is stressful enough but but the constant telephone calls and letters from creditors can make it unbearable.

When the calls stop, it is easier to look at your situation objectively. You can begin taking steps to rebuild your credit and looking at options that may prevent you from financial hardship in the future. Filing bankruptcy isn’t just a way out of debt; it’s a path back to stability in your life. It’s a means to alleviating fear and allowing you to move forward. If you’re drowning in debt or you can see a financial hardship emerging in the near future, contact the law office of Mark A. Bandy, P.C. He can help you see your way through this difficult time and get you back on your feet. Don’t let mounting debt continue to ruin your credit or cause you unnecessary emotional pain.