Personal bankruptcy provides a host of protections for struggling consumers to help them with their debts and to enjoy a fresh financial start. One of these protections is the automatic stay that goes into effect once the filing party has filed for bankruptcy and because of significant protection from creditors it provides, is worth taking a closer look at.
Once a filing party has filed for personal bankruptcy protection, an automatic stay goes into effect that prevents any further creditor collection actions while the bankruptcy process proceeds. This is true in both of the primary types of personal bankruptcy protection including Chapter 7 bankruptcy and Chapter 13 bankruptcy. Once the filing party has filed for bankruptcy, and while they are working out their bankruptcy with the bankruptcy court, they enjoy protection from creditors.
In addition to general breathing room and a break from the stress of creditor harassment and collection actions, the automatic stay can help struggling consumers who have filed for bankruptcy in some specific instances. Depending on the circumstances, the automatic stay may be able to help with foreclosure proceedings; stop an eviction; prevent the disconnection of utilities; stop wage garnishment; and in some other circumstances as well.
Because the automatic stay is such a valuable help during the bankruptcy process, it is important for struggling consumers to be familiar with it and to understand what it does and how it can help them. In addition, those considering filing for bankruptcy should understand the different personal bankruptcy protections available to them so they can decide which option is best for their situation and needs, keeping in mind the automatic stay applies to both types of personal bankruptcy protection.
