Debt situations could make life challenging for those unable to cover their obligations. When debt levels become so high that repaying creditors proves impossible, the debtor may file for bankruptcy in a California federal court. Many look towards Chapters 7 and 13 as pathways to a fresh start. Such results take time, but one of the immediate benefits is the automatic stay bankruptcy provides.
Automatic stays
Crushing debt leaves many people to fall behind on their obligations. Creditors might contact the debtors and demand payment when the persons miss too many payments. A creditor could threaten and pursue civil actions at some point. Those who file bankruptcy may discover creditors stop contacting them because the proceedings involve an automatic stay – an injunction – against collection actions.
An automatic stay may provide more than merely relief from harassing phone calls. The stay could prevent a home foreclosure or a car’s repossession. Losing a vehicle might undermine the ability to earn a living. So, an automatic stay might deliver significant financial help.
Moving forward with bankruptcy
Automatic stays remain in effect during the bankruptcy proceedings. They will end once bankruptcy ends. With Chapter 7 bankruptcy, the end will come sooner than Chapter 13 since Chapter 7 involves liquidation. Chapter 13 requires the debtor to follow through on a payment plan for three to five years. With bankruptcy, debt discharges would eliminate the obligation to pay certain debts, meaning collection ends.
Following through on bankruptcy requirements is necessary to keep the automatic stay in effect. Missing payments on a Chapter 13 plan could lead to the bankruptcy’s dismissal and the resumption of collection actions. Anyone who runs into trouble making payments should inform the bankruptcy trustee.