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What is an automatic stay in a Chapter 7 bankruptcy?

On Behalf of | Jun 17, 2020 | Bankruptcy | 0 comments

If you struggle with medical expenses, credit card debt and mortgage payments in New York, you are not alone. In 2019, more than 773,360 people filed for bankruptcy in the United States, according to United States Courts. People have trouble keeping up on their financial obligations.

Falling behind on your payments may mean constant calls from collection agencies and harassment from creditors. Yet, there are ways you can put a stop to these calls and improve your situation overall.

The automatic stay

Filing for Chapter 7 bankruptcy can help put a stop to these incessant calls. An automatic stay is put in place when you file your Chapter 7 paperwork with the courts. This stay prohibits any collectors from contacting you regarding your unpaid debt. A stay prevents the following:

  • Garnishing wages
  • Constanting calling at all times of the day and night
  • Initiating lawsuits
  • Pursuing lawsuits
  • Pursuing contact through email or texts

It is critical that you include all of your creditors on the bankruptcy documents, as these are the entities that are issued an automatic stay. The stay may remain in place until the bankruptcy is discharged or until otherwise decided by the judge.

Types of creditor harassment

The Fair Debt Collection Practice Act bans creditors from victimizing debtors by using certain forms of harassment. In some cases, creditors may use profanities, threaten violence, inflate a debt, pose as attorneys and threaten to take away property, pets and even children. All of these acts are illegal under the legislation and companies may be held accountable for these deceptive practices.