Bankruptcy can provide relief in a variety of different ways. In addition to providing debt relief and a potential fresh financial start, the bankruptcy protection process can also provide immediate relief through the automatic stay which those considering filing for bankruptcy protection should be familiar with.
How the automatic stay can help during bankruptcy
The automatic stay is a federal injunction that goes into place once the filing party has filed for bankruptcy relief. It immediately stops and collection efforts against filing parties and their property by creditors, collection agencies and government entities. It can provide some immediate relief from calls and letters from creditors while the filing party progresses through their bankruptcy to develop a bankruptcy plan.
The automatic stay provides protection from harassment from creditors while the filing party reorganizes and addresses their debts. There are several different types of collection actions that the automatic stay may be able to help with including home foreclosures, most evictions, vehicle repossession, utility disconnection for at least 20 days, collection of benefit overpayments not returned and collection of debts incurred prior to filing for bankruptcy. Attempts to obtain property from the bankruptcy estate or control the bankruptcy estate may also be stayed under the automatic stay.
Not all collection actions are subject to the automatic stay. The automatic stay also lasts the duration of the bankruptcy process but may be lifted in certain situations that filing parties should be familiar with. Personal bankruptcy protection can help those facing overwhelming debt from the moment they file for bankruptcy protection until their bankruptcy is complete.