Filing for bankruptcy isn’t a decision that’s taken lightly. Most people take the time to carefully consider all their options and how those might affect them now and into the future.
Anyone who’s considering filing for bankruptcy should ensure they consider the benefits of doing this. One benefit is the automatic stay, which is issued by the court once the bankruptcy is filed.
What is the automatic stay?
The automatic stay is a court order that requires creditors to stop all collection attempts. This includes every possible collection action, including sending demands for payment via mail or email. It also includes phone calls, personal visits and text messages. The automatic stay will also prevent nearly all creditors from being able to take legal action because of any of the filer’s debts.
Why is the automatic stay important?
For the filer, the automatic stay is important because it gives them space to work through the bankruptcy process. They may also feel relief and peace because they aren’t facing constant demands for payments.
The automatic stay is also important from a legal standpoint. In bankruptcy, it’s unlikely that all creditors will receive full payment for the balance owed on an account. The automatic stay puts all creditors on a level playing field. No creditor can circumvent the court process to try to recover more than their fair share of what the filer has.
Anyone who’s considering filing for bankruptcy should ensure they fully understand the process, benefits and responsibilities. This can help them make an informed decision about filing.