People who file for bankruptcy are often tired of creditors harassing them for payments. Knowing that they don’t have the money to pay what’s due can put a great stress on the debtor. Bankruptcy provides those individuals with a way to reclaim control of their finances with the help of the court. Some find that the automatic stay gives them peace of mind as they work through the bankruptcy process.
When a bankruptcy case is filed, the court halts the collection attempts for the individuals named in the case. This means that creditors can’t attempt to collect any money from them. It stops the phone calls, mail, emails and other forms of communication from the debt collectors who are harassing them for money.
Why does the court issue an automatic stay?
The court issues an automatic stay because it isn’t fair for any creditor to receive money from the debtor when creditors included in the bankruptcy case aren’t collecting money. Once a person files for bankruptcy, the debts are assigned a priority category. Creditors usually don’t receive the entire balance due on accounts that are included in the case. Debts that have a higher priority will get a larger portion of what’s owed.
While the issuance of an automatic stay shouldn’t be the top reason for you to file for bankruptcy, it is a big benefit. You should discuss this and other aspects of your case with your attorney so that you can ensure that you’re making the correct decision that meets your needs. Filing bankruptcy is your first step toward a fresh financial start.