What is an automatic stay?

If you are one of the many Americans who struggle with credit card debt, medical expenses, mortgages and other bills, you may have been contacted by creditors regarding your late payments. Businesses often turn your unpaid, deficient amounts over to a collections agency, who will contact you in an attempt to collect. Collector phone calls may become burdensome, and in some cases, may be considered harassment. Once you file for Chapter 7 bankruptcy, however, you will be saved from harassing creditor phone calls while your bankruptcy is being processed.

An automatic stay is issued to your creditors once your bankruptcy documents are filed with the courts. It is important to include a complete list of creditors in your bankruptcy documents, as they are the agencies who will receive an alert to stop attempting to collect on your debt. After the automatic stay is in place, collection agencies cannot contact you, garnish your wages and initiate or pursue lawsuits. You may fell a sense of relief once your bankruptcy paperwork is filed and you finally stop receiving threatening collector’s calls.

Collectors are also banned from making threats, calling at all hours of the day and/or night, using profanity, increasing a debt and threatening to have clients arrested if they do not pay their balance, according to the Fair Debt Collection Practices Act. In some cases, collection agencies have threatened to take away children or steal pets as a punishment for not repaying their debt. These types of situations may warrant legal action.

This information is intended to educate and should not be taken as legal advice.

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