Bankruptcy proceedings offer several forms of financial relief for those dealing with major debts. A successful bankruptcy results in the discharge of eligible debts. People no longer need to make payments on debts that they discharge.
Depending on the type of bankruptcy that an individual files, it may take anywhere from a few months to five years or longer to obtain a discharge. People often need protection from aggressive collection activity even before the bankruptcy process is complete.
Many people turn to bankruptcy specifically because they face collection efforts that could do lasting damage, including repossession attempts or creditor lawsuits. The courts grant an automatic stay during bankruptcy filings that begins the same day the filer submits paperwork to the courts. How long does the automatic stay last after an individual files for bankruptcy?
Until they complete the process
For most people pursuing bankruptcy, the automatic stay remains in effect for the duration of their bankruptcy proceedings. Whether they pursue a straightforward Chapter 7 case or a multi-year Chapter 13 filing, the automatic stay typically limits creditor collection efforts until the process is complete.
Until the courts dismissed the filing
Sometimes, people eventually withdraw their petition for bankruptcy. Other times, the courts determine that they failed to fulfill their obligations and may dismiss the pending bankruptcy. In scenarios where the bankruptcy ends without a discharge, the automatic stay typically lifts as well.
Until creditors take legal action
Sometimes, the courts can lift the automatic stay for specific creditors. Businesses hoping to collect on a debt may request a hearing in court and could convince a judge to allow them to continue to pursue collection efforts. In such cases, the courts lift the stay for a specific creditor, but it usually remains in effect for other creditors.
Occasionally, the automatic stay is shorter because the filer has recently, unsuccessfully filed for bankruptcy. For most people, the automatic stay continues to provide protection until they complete the bankruptcy process. They don’t have to worry about creditors calling them or suing them until the bankruptcy is over.
Learning more about the basic protections provided by a personal bankruptcy filing can help those struggling with debt. Filing for bankruptcy can often be a smart move for those facing aggressive attempts to collect on a debt, such as creditor lawsuits.
