The number one reason that most people get pushed over the edge into filing bankruptcy is because of the constant barrage of phone calls by their creditors. Over the last few years creditors have become very aggressive in their tactics to try and collect on their debts. Many complain of degrading comments to make people feel guilty about not being able to pay their bills. Instead of negotiating something with the creditors, they get pushed a little too hard and decide to retaliate against the creditors by filing for bankruptcy.
The most powerful tool that bankruptcy has to offer is the automatic stay. The automatic stay is a court order that is put in place on behalf of the debtor immediately after they file for bankruptcy. After the stay is put in place, the creditors will no longer be able to contact the debtor in an attempt to collect on a debt. This means that after filing bankruptcy, all the harassing phone calls will stop. In fact, the automatic stay will stop foreclosure, wage garnishments, judgments and lawsuits filed by the creditors in an attempt to collect on the debts. This action allows the debtor to get their life back and answer their phone again. No longer do they have to hide and not answer the door because of being afraid of being served papers for a lawsuit. This in itself for many people makes filing bankruptcy well worth it.
In a Chapter 7 bankruptcy the automatic stay will only stop a foreclosure temporarily, but in many cases allow the debtor time to come up with a game plan. In a Chapter 13 bankruptcy it will last the entire timeframe of the Chapter 13 payment plan. As long as the debtor can continue making the payments the automatic stay will be in place and protect the debtor.
The creditor can file a motion for relief of stay if the debt is secured by a piece of property. If they can prove to the court that the debtor is not paying for the property and the debt is secured by that piece of property they can ask the court to remove the stay so they can continue on with their foreclosure. This is another reason that it’s important that the debtor finds a bankruptcy attorney that is familiar with their financial situation. The bankruptcy attorney will know how to use the benefits of the laws to protect as much property as possible and for the longest amount of time.
When deciding whether or not filing bankruptcy is for you, consult with a bankruptcy attorney to evaluate your current financial situation.