The automatic stay that is imposed on a case upon filing for bankruptcy is one of the major benefits of doing so. The filing party is afforded a temporary reprieve from collecting activities and given time to regain financial stability. Effective systems do not completely eliminate the debt, but they do prevent further collection efforts while the settlement is being negotiated. All too well, the mental and emotional toll of debt is well known to everyone who has ever had to deal with it. The sleepless nights, never-ending torrent of collection letters, and frantic phone calls.
According to Benenati Law Firm, the bankruptcy petitioner is afforded the protection of the automatic stay, which prevents creditors from taking any further action to collect on the debt. This includes legal actions to foreclose on a home. Both Chapter 7 and Chapter 13 bankruptcies are covered by the stay.
Once the automatic stay is activated, when will it begin?
The court will notify all of your creditors in writing within the first twenty-four to forty-eight hours after you file for bankruptcy. When the automatic stay is in effect, your creditors are prohibited from taking any further collection proceedings, including those that have already been initiated. You can sue the creditor for contempt of court and seek compensation for your legal fees if they continue to contact you after a stay has been issued. If that occurs, the creditor is on the hook for the costs.
Examples of violations of this kind include having your car repossessed during bankruptcy or starting the foreclosure procedure on your home while the law is currently in place. These two situations are both violations. An incident that seems inconsequential at first glance, like a creditor sending a collection letter to the wrong address, might have far-reaching effects.
Here is a rundown of what bankruptcy filers can do to maximise the effectiveness of the automatic stay:
- Maintain Current Insurance Coverage
As the terms of your settlement agreement are ironed out, it is imperative that you maintain timely payments on your house and car insurance premiums. If this is the case, you risk losing your home and all of your possessions being repossessed.
- Everything Depends On The Timing
The contract at the heart of the issue could be made more binding by a timely bankruptcy filing. If a creditor intends to file a lawsuit against you in court, for instance, you have the right to file a petition with the court before the hearing to stop the proceedings from moving further, and you have until the moment the hearing is due to begin to do so. Creditors that have already initiated legal action against you are not exempt from this protection.
- Make Use Of Your Legal Protections
You only have a limited amount of time to take legal action against a creditor who violates the automatic stay. It is important to contact a bankruptcy lawyer as soon as possible because he or she may need to initiate legal proceedings by filing an action or complaint with the court.
Contact the law office as soon as possible to set up a no-cost consultation if you have concerns about the current situation or are having trouble paying your financial obligations.Date Of Update: 23 December 2022, 18:28