One of the most disheartening things that a person who’s in debt has to deal with is the collection attempts by creditors. Those attempts are often difficult to deal with because the person can’t just come up with more money when the creditor demands it.
It can often be difficult to determine how to handle these cases. One option that may do this quickly is filing for bankruptcy, which is particularly attractive to some people because of the automatic stay.
What is the automatic stay?
The automatic stay is a court order that prevents creditors from being able to seek payments from the person who filed bankruptcy. This can give you time to think clearly about your financial situation without feeling the pressures of creditors trying to collect on the debt.
This court order also serves another important role—it prevents creditors from trying to get more money by circumventing the bankruptcy process. Once you file bankruptcy, there’s a good chance that creditors won’t receive full payment for the included accounts. The automatic stay is a way to put all creditors on a level playing field so each one will only get what they’re due through the bankruptcy.
The automatic stay is a benefit of bankruptcy, but it shouldn’t be the only reason you file. Instead, consider your full financial picture and the benefits it will have now and in the future. It may behoove you to work with someone who understands bankruptcies so you can ensure you’re doing everything you should so your debts can be legally resolved.