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What is an automatic stay?

| Dec 24, 2018 | Chapter 7 Bankruptcy

If you are struggling with debt, you may know what it is like to be contacted by collection agencies at different times of the day or night. Did you know that by filing for bankruptcy, you may be able to put an end to harassing creditor calls? It is referred to as an automatic stay, and it goes into effect when you submit your bankruptcy documents into the court. Under the automatic stay, creditors and collection agencies are no longer able to contact you regarding your debt. They are also unable to garnish your wages, make demanding telephone calls and initiate or continue lawsuits that were filed because of your late or delinquent payments.

Collectors are restricted on what actions they can take to collect past debt under the Fair Debt Collection Practices Act. This legislation prohibits creditors from calling at all hours of the day and night, using profanities, threatening to arrest clients, inflating a debt or threatening to have clients thrown in jail if they do not make payments. In some cases, collectors have told clients that they will have their children or pets taken away if they do not make payment arrangements.

In order to ensure the automatic stay restricts all collectors, it is important that you list all of your creditors on your bankruptcy documents. This is the list the courts use to issue the automatic stay that will keep them from contacting you. If creditors still contact you after the stay is in place, you should tell your attorney immediately, as this is, in most cases, prohibited.

This information is intended to educate and should not be taken as legal advice.