Filing for personal bankruptcy can help you start over again financially. As soon as you file for bankruptcy, you'll get immediate relief from creditors under what is called an automatic stay. This is an order that tells your creditors to stop trying to collect money from you - immediately.
File Under Chapter 7 or Chapter 13
You can file personal bankruptcy in one of two ways, both named after sections of the bankruptcy law. Chapter 7 cancels many personal debts, but you have to sell off many of your belongings. Under Chapter 13, you can repay the money you owe over a period of three to five years and keep your property. You may not qualify for Chapter 7, or you may choose Chapter 13 to keep your belongings. Whichever type of bankruptcy you file, you will get an automatic stay.
The Automatic Stay Starts Immediately
The automatic stay starts as soon as you file your bankruptcy paperwork at the courthouse. The court clerk mails notices to your creditors that you have filed bankruptcy. When they've been notified, they must stop calling you, harassing you, writing to you, or taking any actions to get money from you. If you filed Chapter 7 bankruptcy, the automatic stay lasts until your debts are canceled or discharged. If you filed under Chapter 13, the automatic stay lasts until your repayment plan ends.
The Automatic Stay Has Limits
The automatic stay stops lenders from repossessing your car, foreclosing on your house, suing you for credit card debt, or cutting off your utilities. The automatic stay isn't a free pass on all collections and lawsuits, though. Criminal cases and child support cases, for example, aren't affected by the automatic stay. The automatic stay also doesn't apply to money you borrow after you file for bankruptcy.
Notice of Automatic Stay
The notices the bankruptcy clerk sends out to your creditors can take a few days to several weeks, so you or your lawyer should also send out notices. For example, you can fax a copy of the court paperwork to your bank to stop the bank from foreclosing. If anyone tries to collect money from you after receiving notice of the automatic stay, let your lawyer know. You have the right to sue a creditor who harasses you.
A Personal Bankruptcy Lawyer Can Help
The law surrounding the use of automatic stays in personal bankruptcy is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a bankruptcy lawyer.