Stop creditor harassment and foreclosure with bankruptcy

For many people contemplating bankruptcy, one of the most appealing aspects of filing for bankruptcy is something called the automatic stay, which provides borrowers with powerful protection from creditors and bill collector.

The automatic stay is a court order that takes effect immediately when a person files for bankruptcy. It temporarily bars creditors from attempting to collect payment from the borrower while his or her bankruptcy case is pending. The purpose of the automatic stay is to help the bankruptcy process flow smoothly by giving borrowers time to focus on putting their finances in order.

Automatic stay stops collection efforts

When a person files for bankruptcy, the automatic stay provides protection against most types of collection actions, including:

  • Foreclosure.
  • Wage garnishment.
  • Repossession.
  • Disconnection of utilities.
  • Eviction.

Not only does the automatic stay prevent creditors from initiating new collection efforts against the individual, but it also puts a halt to any proceedings that may already be underway.

Stopping foreclosure

For some homeowners, the main appeal of the automatic stay during bankruptcy is the opportunity it provides to stop or prevent foreclosure. The foreclosure protection offered by the automatic stay may be short term or long term, depending on the type of bankruptcy the homeowner has selected, as well as other factors involved in the case.

During chapter 7 bankruptcy, which is sometimes called liquidation, the automatic stay offers short-term protection against foreclosure. Depending on the homeowner's individual circumstances, however, the automatic stay may not be enough to allow him or her to stay in the home after a Chapter 7 bankruptcy case concludes.

On the other hand, for homeowners who pursue Chapter 13 "reorganization" bankruptcy, the automatic stay remains in effect for a longer period of time and often helps the borrower to remain in the home on a permanent basis. Therefore, people who wish to keep their homes while getting out of debt often choose to pursue Chapter 13 bankruptcy. However, because the bankruptcy laws are highly complex and each person's case is unique, it is important to consult with a qualified bankruptcy lawyer when considering the options for stopping foreclosure.

A bankruptcy lawyer can help

If your debts have become unmanageable and you are interested in exploring your legal options, a lawyer with experience in bankruptcy law can help you find the right course of action for your specific circumstances. With the help of a skilled attorney, you can get out of debt and back on the path toward a healthy financial future.