Filing for bankruptcy results in the commencement of what is referred to as the ‘automatic stay injunction’ which is feature of the U. S bankruptcy law. The automatic stay puts a halt for a while to annoying telephone calls, unpleasant letters and threats of suing. Besides, it also retains informed debt collectors as persons barred from the injunction in case they evade it.

If that does not precisely fall in the category of debt cancellation, it sure is the breather that debtors struggling with such severe penalties as foreclosure or wage garnishment need.
In simple terms, an automatic stay is a provision in the United States bankruptcy laws & procedures and that provides duly qualified debtors with an opportunity to avoid further collection of a debt from them for a period of time. That is basically, the way an automatic stay works; it puts a stop to all collection activities by creditors.

Though it sounds easy, it is far from it; hence it is often referred to as automatic. The stay put begins in terms of Section 362 of the U. S. Bankruptcy Code the moment that an individual or business files for bankruptcy. Chapter 7 and Chapter 13 – which inform 99 percent of consumer bankruptcy cases – are major individual categories of bankruptcy laws. Of the three types of bankruptcies that are freely accessible to the public, only chapter 13, which makes up 9% of the population, permit for automatic stays.

Thus, automatic stays are not the generic tactics of debt relief. They have their limitations. However, an automatic stay can also afford the breathing that is often needed by debtors before they can begin to work out their affairs with a view to paying off their debts before creditors can begin to make efforts to recover a specific debt. An automatic stay is beneficial for both the creditors and the debtors as well since it has certain provisions for the interests of the creditors. How so? Thus, it levels the playing field for all of the creditors. Thus, once an automatic stay is granted no single creditor can legally proceed to recover the owed amount to the prejudice of the other more senior creditors.

It is recommended to inform all the creditors by listing them in the bankruptcy petition so that they know that the process and therefore the automatic stay is active. On this one, the legal options for managing, avoiding or eradicating consumer debt may or may not present every consumer with the best light at the end of the tunnel but one may just feel as if the cavalry has arrived. Filing for bankruptcy results in the commencement of what is referred to as the ‘automatic stay injunction’ which is feature of the U. S bankruptcy law.

The automatic stay puts a halt for a while to annoying telephone calls, unpleasant letters and threats of suing. Besides, it also retains informed debt collectors as persons barred from the injunction in case they evade it. If that does not precisely fall in the category of debt cancellation, it sure is the breather that debtors struggling with such severe penalties as foreclosure or wage garnishment need. In simple terms, an automatic stay is a provision in the United States bankruptcy laws & procedures and that provides duly qualified debtors with an opportunity to avoid further collection of a debt from them for a period of time. That is basically, the way an automatic stay works; it puts a stop to all collection activities by creditors. Though it sounds easy, it is far from it; hence it is often referred to as automatic. The stay put begins in terms of Section 362 of the U. S. Bankruptcy Code the moment that an individual or business files for bankruptcy. Chapter 7 and Chapter 13 – which inform 99 percent of consumer bankruptcy cases – are major individual categories of bankruptcy laws. Of the three types of bankruptcies that are freely accessible to the public, only chapter 13, which makes up 9% of the population, permit for automatic stays.

Thus, automatic stays are not the generic tactics of debt relief. They have their limitations. However, an automatic stay can also afford the breathing that is often needed by debtors before they can begin to work out their affairs with a view to paying off their debts before creditors can begin to make efforts to recover a specific debt.

An automatic stay is beneficial for both the creditors and the debtors as well since it has certain provisions for the interests of the creditors. How so? Thus, it levels the playing field for all of the creditors. Thus, once an automatic stay is granted no single creditor can legally proceed to recover the owed amount to the prejudice of the other more senior creditors.
It is recommended to inform all the creditors by listing them in the bankruptcy petition so that they know that the process and therefore the automatic stay is active.

What To Do If a Creditor Violates the Automatic Stay

It is important to note that a creditor who refuses to adhere to the stay could get penalized especially when the debtor has filed the documents to sue the creditor.
Of course, it can be easily understood that creditors do have the motivation to adhere to the provisions of the automatic stay. But they must have received some notice of the bankruptcy filing to cease the collection activities.

Each debtor’s address filed when the case was being opened is used by the bankruptcy court to post the notice. If you leave a creditor out, the courts could as well. Thus, if one wants certain creditors to be left out of the bankruptcy process, then the only option left would be to file for the so-called ‘sophisticated’ bankruptcy. It could take a few weeks for a large company to process the notice of Chapter 7 even if you don’t plan to file it.

It is advisable, especially if a peculiar case contains the case number of the filing, to ensure a photocopy of all the paperwork is kept to silence an ignorant creditor. It might be one of the options; for instance, a debt management plan that could help come back to a better financial status than actually declaring bankruptcy. Speak with a nonprofit credit counsellor to find out all the possibilities allowed.