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What is the automatic stay in bankruptcy?

On Behalf of | Jul 20, 2023 | Bankruptcy

People who file for bankruptcy are usually tired of having to deal with creditors trying to get money from them. For some people with debts, there simply isn’t enough money to pay their bills. You might benefit from filing for bankruptcy if you’re in this position. This is a legal way to get a fresh financial start so that you can enjoy your life. 

One of the benefits of filing for bankruptcy is that the court issues an automatic stay. This prevents creditors from trying to collect on the debts included in bankruptcy. They can’t call, message or use any other form of collection attempts after the filing. 

Why is the automatic stay important?

The automatic stay is important in a bankruptcy case because it prevents creditors from trying to get more money than what they’d get if they had to wait on the bankruptcy court. It also provides the filer with a break from what feels like harassment so they can begin to rebuild their life. 

Creditors aren’t likely going to get the full amount that’s due when a person files for bankruptcy. Instead, the available money from the liquidation of the person’s assets or the payments they make to the bankruptcy trustee is split between all creditors based on a predetermined order. 

Filing bankruptcy is an important decision that must be carefully considered. Working with someone who can explain how bankruptcy will impact you is beneficial. You must also understand your rights and responsibilities when you file. Once you file, you can start working toward building the financial future you want.