What is an automatic stay in a bankruptcy case?

People who are getting harassed by creditors can often get an automatic stay when they file for bankruptcy.

A number of people in Tennessee and across the country find financial relief by filing for bankruptcy each year. While there are several forms of bankruptcy, debtors are able to discharge all or a portion of their debt or reorganize their debt into a payment plan. Ultimately, bankruptcy offers financial freedom to those at risk of losing their home or having their property taken away from them. People who fall behind in making their payments may be a target for demanding creditors. Debtors have rights when it comes to creditors and the tactics they can use to collect money from them.

Understanding creditor harassment

People who find themselves overwhelmed with debt may be burdened by the harassing calls of numerous creditors. In some cases, creditors can exceed the limits of what is an appropriate reminder of that a payment is due. Creditors may call at all hours of the day, threaten to garnish wages from debtors' paychecks and even put a lien on property if the debt is not paid off. Accounts of where creditors have made threats to debtors that they will pursue criminal prosecution if a payment is not made has also been heard of. When people file for bankruptcy, however, it may put an end to harassing creditor calls and other actions.

What is an automatic stay?

According to the U.S. Courts, an automatic stay is put in place once a debtor has submitted all of his or her paperwork to the bankruptcy court. The trustee, who is appointed to oversee the bankruptcy case, will send notice to all of the creditors listed on the bankruptcy documents. At that time, those creditors are no longer able to contact the bankruptcy applicant regarding late payments. It is crucial the debtors understand the terms of the stay, as it may be in place for a certain period of time. Once the stay is expired, creditors may continue to contact debtors regarding missed payments.

Obtaining legal counsel

Filing for bankruptcy can be a tedious process, especially when you are under stress from receiving harassing creditors' calls. You may want to obtain the legal counsel of a knowledgeable attorney who understands the bankruptcy laws in Tennessee. Not only can a lawyer make sure that you have all of your bankruptcy paperwork filled out and meet the tight deadlines set by the U.S. Courts, he or she can help answer any questions you have regarding the bankruptcy process.