Many people who are experiencing financial problems may be able to benefit from filing for bankruptcy.¹ While it is true that a bankruptcy can stay on your credit report for a significant amount of time, it also can result in a significantly lower debt burden than the one you had prior. One of the most immediate benefits of filing for bankruptcy is known as the “automatic stay.”² The automatic stay is an injunction that is automatically issued the moment a person files for bankruptcy. It prohibits creditors from initiating any action to collect on a debt, including filing lawsuits or repossessing property. As a result, it can benefit consumers in a number of specific ways. Some of the most common include are detailed below:
Stopping harassing phone calls and letters – Many people who are in debt are subjected to daily phone calls and letters demanding payment or threatening legal action. In some cases, these creditors may even call friends or family in an attempt to collect a debt. This can be embarrassing and make a simple task like answering the phone or checking your mailbox much more stressful. Once the automatic stay is issues, these types of actions are prohibited, and creditors who violate the stay are subject to legal action.
Temporarily stopping foreclosure or repossession – If you fall behind on your house or car payments, the bank or other institution who lent the money to purchase these items may be able to repossess them if you do not get current with your payments. While the automatic stay will not necessarily help you keep your house or car in the long term, it can buy you some time to try and catch up with your creditors or renegotiate the terms of your loan so that you will be able to keep up with your payments in the future.
Suspending any active lawsuits attempting to collect on debts – The automatic stay also has the effect of barring creditors from continuing to collect on any debts through an ongoing lawsuit.
Contact a Long Island bankruptcy attorney today to schedule a free consultation
If you are experiencing financial problems, you should discuss your options with an experienced Long Island bankruptcy lawyer as soon as possible. To schedule a free consultation with bankruptcy attorney Ronald D. Weiss, call our office today at (631) 296-0322 or email us through our online contact form.
¹ http://www.uscourts.gov/FederalCourts/Bankruptcy.aspx
² http://www.law.cornell.edu/uscode/text/11/362