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How can an automatic stay during bankruptcy help consumers?

| Apr 10, 2020 | Bankruptcy |

Personal bankruptcy options provide important protections for consumers struggling with overwhelming debt. The automatic stay is an important part of the bankruptcy protection process for filing parties to understand. It can provide them with additional protections they should be familiar with.

Once the filing party files for bankruptcy protection, an automatic stay goes into effect that prevents creditor collection actions during the bankruptcy process. This can be a relief to many struggling consumers fielding daily creditor calls and the stress associated with them.

In addition to preventing creditor harassment, an automatic stay may be able to help with specific concerns filing parties have including:

  • Prevent the filing party’s utilities from being disconnected;
  • Stop foreclosure proceedings against the filing party;
  • Stop eviction proceedings against the filing party;
  • Stop the return of government benefits overpayments; and
  • Stop wage garnishment.

Though the automatic stay may not be able to help in all circumstances, and there may be certain limits to the help it can provide in some situations the filing party should be familiar with, it is an important protection for filing parties to be aware of. The automatic stay applies whether the filing party has filed for Chapter 7 personal bankruptcy protection or Chapter 13 personal bankruptcy protection.

Different personal bankruptcy options are available for consumers in different circumstances based on their needs and goals. Whatever bankruptcy option the filing party determines is best for them, they can know they are protected and that the process is designed to help them enjoy debt relief and a fresh financial start free from the stress of creditor calls and harassment.