What is the Automatic Stay?
Posted By
Majed on Apr 21, 2010 8:22pm PDT
As with any legal process, filing for Chapter 7 bankruptcy can be an intimidating process. There are many terms thrown around, like discharge, liquidation and automatic stay. Today, I will break down this term and explain how it is one of the most valuable functions of a Chapter 7 filing.
Once a petitioner files for Chapter 7 protection, creditors are immediately and effectively prohibited from any attempts to collect a debt. This includes lawsuits, letters and even phone calls. This is called “The Automatic Stay”. A creditor may not file a lawsuit against you, or even contact you regarding a debt, even if valid, once the Automatic Stay commences. Although the court will likely notify the creditors that you have filed for Chapter 7, no judicial action is required for the Stay to come into effect. The only action required is that a consumer files for Chapter 7.
The Automatic Stay is helpful for consumers for several reasons. Firstly, it eases the immediate stress and anxiety of a barrage of creditor phone calls. Secondly, it allows consumers to focus on starting over without worrying about commencing lawsuits, wage garnishments or other setbacks. Another help provided by the Stay is that adverse legal action that is already in place is also stayed, in addition to commencing action.
Filing for Chapter 7 is a very serious decision that should not be taken lightly. Filing for Chapter 7 is a very serious decision that should not be taken lightly. An experienced Fears | Nachawati bankruptcy attorney can explain your legal options and help you find a way that works for a bright financial future.