Bankruptcy may sound like a last resort, and the media often paints it as a sort of rock bottom. Both of these assumptions do not take your unique situation into account. As a tool, bankruptcy has the ability to reorganize your debts and start you towards a new, brighter chapter in your life.
One of the biggest ways a Chapter 7 bankruptcy accomplishes this is through its automatic stay, which places a hold on most of your debts. This grace period goes a long way to giving you that breathing room before you meet with creditors.
The length of an automatic stay
According to the United States Courts, a petition for bankruptcy under Chapter 7 stops collection against you or your property. This is not a judicial action like a court order. It is instead a function of bankruptcy law. Your creditors, in general, may not initiate lawsuits, wage garnishments or even call you while the automatic stay is active.
This stay aims to provide you with time to get your finances in order while a bankruptcy clerk informs all creditors you list of the situation. The stay lasts around 30 days or the length of time it takes for you and your creditors to meet and discuss the bankruptcy.
The protections of an automatic stay
During this time, you have protection from creditors and that lends you certain benefits. From halting evictions or foreclosures to just keeping your power on, these stays have the chance to take a chaotic situation and provide you the immediate relief you need.
Petitioning and going through bankruptcy gets complicated fast. When considering this debt relief tool, be sure to communicate with your family and lean on your resources when learning more about Chapter 7 bankruptcy.