The decision to file for bankruptcy is one that usually is not made easily. Most people wait until they’ve exhausted all other options. If you’re considering taking the steps to file for bankruptcy, it is critical to ensure that you understand exactly what this means for your finances and your life.
If you file for bankruptcy, you have certain responsibilities, such as listing all of the debts you have, going through credit counseling, taking a debtor education course and attending all required hearings. You will also reap the benefits of certain protections — one of which is the automatic stay.
What does the automatic stay do?
Creditors typically don’t receive full payment for the balance that’s due, so some may want to try to increase what they get. The automatic stay’s primary purpose is to stop creditors from trying to circumvent the bankruptcy process in an effort to collect more money than they’d receive through the bankruptcy.
With an automatic stay in place, creditors must stop contacting you. This means that you won’t have to worry about answering your phone, checking your mail, getting a direct or text message or hearing a knock on the door because all of those forms of collection attempts must stop.
There may be times when creditors may still try to collect money from someone. Working with an experienced legal professional can be beneficial if you’re considering bankruptcy. They can help you determine whether bankruptcy is the right choice for you. While the automatic stay is a nice benefit of filing bankruptcy, it shouldn’t be the only factor that you consider when you’re determining what to do.