If you have become increasingly alarmed at the state of your financial situation, you may be considering taking the big step and declaring bankruptcy. It isn't easy dealing with the constant phone calls and letters from debt collectors when you are unable to pay your bills on time, especially after working hard at your job all day. The act of filing for bankruptcy can put an end to debt collection and more with something called the automatic stay. Read on to learn more about this perk of filing for bankruptcy.
Keep more cash
When credit card debt gets overwhelming, it can be a struggle just to make those large minimum payments. That money can be put to better use elsewhere once you file for a chapter 7 bankruptcy, however. You can say goodbye to making payments on any unsecured debts, normally all personal loans and credit cards once you file for bankruptcy. So, not only does the entire debt obligation go away once your bankruptcy is final, but you get immediate debt relief with the initial act of filing.
Tell the bill collectors to "go away"
Another immediate benefit of a federal bankruptcy filing is the stoppage (or "stay") of all debt collection activities. Creditors are prevented from making any sort of contact with bankruptcy filers whatsoever. It should be noted that many creditors are not notified instantaneously of your bankruptcy filing, but will cease and desist with their collection efforts once you provide them with your bankruptcy case number and your bankruptcy attorney's contact information.
Keep your home, at least temporarily
Few issues strike more fear than the loss of a home, but you can put a temporary stop to any foreclosure proceedings with a chapter 7 bankruptcy filing. Unfortunately, home loans are considered secured debts, and depending on several factors you may eventually end up losing the home. You can count on several months of relief, however, which may give you enough time to become current on your mortgage payments. The stay will at least give you some time to make alternate living arrangements.
Stay in your rental home, at least temporarily
The danger of being evicted due to owing past rent payments to your landlord may be put on hold, for a while. Unfortunately, if the home owner managed to file eviction paperwork before you filed your chapter 7 bankruptcy paperwork, you may need to quickly find other lodging. If you file before they do, you may get a temporary reprieve, allowing you time to bring your rent payments up to date.
Speak with your bankruptcy attorney, one like Mast Thomas K, for more information about the powers of the automatic stay.