Overlooked benefits of the automatic stay in bankruptcy

On Behalf of | Feb 9, 2024 | Bankruptcy |

When you file for bankruptcy, one of the many benefits you will receive is an automatic stay. This means that until your case is closed, most of your creditors cannot contact you and they must halt their collections efforts. It’s a court-ordered tool, and you may be able to sue any creditors who wrongfully defy the stay.

There are just a few of the reasons why this is such an essential part of how bankruptcy cases unfold.

It can relieve the mental stress of debt

It can take time to work up to the point where you realize you need to file for bankruptcy. Whether you keep looking for options to solve your debt or trying to avoid thinking about how much you owe, one thing is true – creditor activity often worsens the experience.

It’s understandable that they want you to pay them, but some of their tactics are questionable, and some may be illegal. Even when they do not breach any laws, their relentless pursuit of you via phone, email, message and more can harm your mental health. Once you file, thanks to the automatic stay, the creditors are obligated to stop calling you. If they want to discuss anything, they must contact the bankruptcy court.

It can make it fairer for less aggressive creditors

Some creditors believe that hassling you more will result in you paying any money you have to them rather than anyone else you might owe. Once you file, the court will decide how to distribute any funds available to pay off debts. It can be comforting to know that a small, friendly business you owe now has a better chance of getting some payment rather than being overlooked due to the noise a large creditor creates.

An automatic stay is just one of the many bankruptcy benefits you may want to learn more about if you’re facing debts that you cannot pay. This approach can potentially help you regain your financial footing and help you build a brighter future.