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Automatic stay: What you should know?

| Nov 24, 2020 | Bankruptcy, Chapter 7

If you are currently struggling with overwhelming credit card, medical or mortgage debt, you know first hand the difficulties of dealing with harassing creditor’s calls. Once you have missed a payment or have fallen behind on financial agreements, creditors often start calling in an attempt to collect payment. 

Yet, there are ways to stop harassing creditor calls, which may allow you to get a fresh financial start and rebuild your credit. 

What is an automatic stay?

Once you file your Chapter 7 bankruptcy paperwork, an automatic stay is set in place. This stay prohibits creditors and collection agencies from contacting you regarding unpaid debt, according to the U.S. Courts. In some cases, this stay remains in place until the bankruptcy is discharged. However, depending on the circumstances surrounding the situation, the stay may only be temporary. 

It is critical to list all creditors on your bankruptcy paperwork, as these are the entities that are given the stay prohibiting them from contacting you. It is important to contract 

What type of creditor harassment is stayed?

According to the Fair Debt Collection Practices Act, an automatic stay wards off certain types of creditor harassment, including the following: 

  • Garnishing wages 
  • Continuing lawsuits 
  • Making phone calls at all hours of the day and night 
  • Using false or misleading representation in an attempt to collect a debt 
  • Threatening to cause harm  
  • Inflating a debt or adding hefty fees and/or fines 

Creditors are prohibited from using obscene language and threatening to confiscate property during the bankruptcy process as well. If creditors continue to contact you once the automatic stay is in place, they may be issued a fine. 

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