Choosing bankruptcy as a way to find relief from your debt problems is often a good place to turn to, especially when you have mounds of debts you cannot repay. Using Chapter 7 for this is one option you have, and this branch of bankruptcy is often the preferred option because it offers debt-forgiveness; however, both Chapter 7 and Chapter 13 offer something called an automatic stay.
What Is an Automatic Stay?
In bankruptcy, the courts issue an order called an automatic stay after they receive the filing documents from a person choosing bankruptcy for debt-relief. This order stops creditors from contacting the person who filed. Creditors cannot call, text, email, or send letters to the person listed on the automatic stay. In fact, it is illegal for a creditor to contact a person in any way after they receive notification about the automatic stay. If a creditor does contact a person after this, the person can sue the creditor.
Which Creditors Receive This Order?
When you file for Chapter 7 bankruptcy, your lawyer will list every creditor you owe money to, and the lawyer might even include potential creditors that you suspect you might owe money to. Each of these creditors will receive the order from the court that will tell them to stop pursuing you for the money you owe. These will be the only creditors that cannot contact you.
Because of this, you should make sure you list every possible creditor you may have. If you miss listing a creditor in Chapter 7, that creditor will still be able to contact you and pursue you for the money you owe. While there is a way to add creditors to your list after filing, it can be very difficult to do this. This is why your lawyer will want to get the list correct the first time.
How Long Will This Process Last?
The automatic stay in Chapter 7 will last until the court offers you a discharge for your case. This can often take several months or longer, and it depends on the case. The discharge tells creditors that your debt has been forgiven. Therefore, these creditors will have no reason to contact you after the discharge, unless the debts did not qualify for a discharge. If you still owe money to certain creditors after the discharge, they can begin contacting you once again.
An automatic stay provides relief from phone calls and letters demanding payment, and it can be one of the most beneficial aspects of Chapter 7. To learn more about this branch of bankruptcy, talk to a lawyer today.