The moment you file a bankruptcy petition with a Florida court, you will be granted an automatic stay against most creditor collection activities. The stay generally remains in place for the duration of the proceeding unless there is a valid reason to remove it.
How an automatic stay might help you
Prior to filing for bankruptcy, your lender may have refused to renegotiate the terms of an existing loan or forgive an outstanding credit card balance. This is because it had the right to take your car, file a lawsuit or take other steps to get its money back. However, after you file, your lender has fewer options to get what it is owed. Therefore, it may be more likely to negotiate in good faith now that you have more leverage. You should know that your creditors may get nothing if you file for Chapter 7 protection and don’t have any nonexempt assets.
The automatic stay may be contested
Your creditors may contest the stay on the grounds that you filed for bankruptcy in bad faith. For instance, if it can be shown that you racked up a large credit card bill just days before going to court, the stay may be dropped entirely or dropped for the entity that owns the debt. A stay may also be removed or only applied temporarily if you have filed for bankruptcy in the past.
Bankruptcy may be ideal if you are looking for a way to eliminate or reorganize debts in an efficient manner. If a debt balance is discharged, you are under no obligation to repay it. However, priority and secured debtors such as the IRS or a mortgage lender may choose to start or continue collection efforts after your case has been resolved.