One of the most disheartening things a person who owes money to others has to deal with is calls and letters for collections. These can quickly turn a good day sour, so getting them to stop is likely a priority.
When you file for bankruptcy, you have the benefit of the automatic stay. This puts a stop to the collection attempts, which should give you some peace during the bankruptcy process. To be clear, they can’t resume the collection attempts once the bankruptcy is finalized because any balances due are absorbed as part of the process.
Can creditors try any collection attempts?
Once the court issues the automatic stay, creditors must stop all collection attempts. They can’t send collection letters, call you, or visit your home. They must wait for the bankruptcy trustee to determine what they’re owed as part of the bankruptcy. You should report any collection attempts to your attorney so they can alert the court to what’s going on.
Why is the automatic stay important?
While it may seem the automatic stay only benefits the filer, that’s not at all the case. The automatic stay ensures the bankruptcy process is fair for all creditors because it prevents creditors from trying to circumvent the system to get the money they’re due. It’s highly unlikely that creditors will receive everything they’re due.
Making sure bankruptcy is the right option for you is crucial. This is your chance at a fresh financial start, but you must remember that you have responsibilities to handle so the case can go according to plan. Working with someone who knows about these matters is beneficial so you can do what’s best for you.