When you file for bankruptcy, something called an automatic stay goes into effect. Here’s what you should know about it if you’re considering declaring bankruptcy.
The Automatic Stay Defined
The automatic stay is a type of injunction that is initiated upon filing for Chapter 7, Chapter 13, or Chapter 11 bankruptcy. This injunction mandates that creditors and collection agencies cease all collection activities and stop contacting you regarding your debt. They can no longer send letters to your home, call, or email you in an attempt to collect the money you owe.
How to Get an Automatic Stay
The automatic stay is just that — automatic. This means that it’s granted as soon as you file for bankruptcy without you needing to do anything else. The bankruptcy court will notify your creditors that you have filed and to request that they cease communication with you, along with collecting any information needed from them such as confirmation of the amount of debt, the date the debt was assumed, etc.
How an Automatic Stay Can Benefit You
Taking back control over your financial situation can be difficult when you have creditors constantly calling, emailing you, or sending you letters about the money you owe. While some creditors can petition the court to lift an automatic stay, this can buy you a little bit of time to get things like your vehicle or mortgage payments caught up before they are repossessed or foreclosed on.
If you owe rent to a landlord, they may ask for the stay to be lifted so they can legally evict you from the property for nonpayment, but if you are able to get the rent paid in this time frame, an eviction can no longer be pursued for this reason.
Your Rights Against Debt Collection Harassment
Under the Fair Debt Collection Practices Act, you have certain rights not to be harassed by creditors, even before you file for bankruptcy. A creditor may not call before or after certain hours of the day, use profane or obscene language when speaking with a debtor, threaten to call the police or have the debtor jailed, or otherwise make misleading or false representations in an attempt to collect the debt.
When to Contact a Texas Bankruptcy Lawyer
If you’re considering filing for bankruptcy or are simply overwhelmed with more debt than you can handle, don’t wait to get help. We can assist you in determining if bankruptcy is the right option for you and can help you file appropriately to protect your assets and financial future. Contact us now to schedule your free consultation at (469) 751-7469 (DFW) or 254-304-7161.