When you miss payments, your creditors may call you frequently in an attempt to get you to make a payment. The stress from the constant calls can be overwhelming. When you file bankruptcy, a process called the “Automatic Stay” stops your creditors from contacting you in any way regarding your debt.
“The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws. It gives the debtor a breathing spell from his creditors, stopping all collection efforts, all harassment, and delays foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.” (Senate Report No. 95-989)
The automatic stay goes into effect as soon as you file your paperwork with the bankruptcy court, there are no hearings or signatures required of the judge. All wage garnishments, evictions, utility shut-offs, and vehicle repossessions must also stop, and any other collection attempts against you. If a creditor contacts you in violation of the stay, you may seek damages with the court.
Relief of Stay
A creditor may ask the court for relief of the stay if they feel their collateral is being exposed to an undue risk that may unfairly affect the creditor’s interest. If the judge grants the relief, the lender may resume collection attempts against you.
The stay will remain in effect for a reasonable time to allow you to make arrangements with the court as to how you will handle your debt. If the debt is eligible to be eliminated in a Chapter 7 case, then there is no reason for the lenders to contact you as you will no longer be legally responsible for the debt. And if you are reorganizing your secured debt as in Chapter 13 bankruptcy, provisions will be made to repay the arrears.
If you would like more information on how bankruptcy can stop the creditors from calling, contact a Citrus Heights bankruptcy attorney today.