Upon filing bankruptcy, as a debtor, an automatic stay is enacted. What an automatic stay does is prohibit creditors from doing certain actions. For example, once bankruptcy is filed a creditor can not due the following:
Commence or continue a lawsuit against you in any attempt to collect the debts that you allegedly owe. Continue with any collection calls. Once bankruptcy is filed a collection agency must cease and desist all attempts to collect any alleged debts. All repossessions must stop. Please note that if you are behind on payments, filing a Chapter 7 bankruptcy can temporarily stop the repossession of your car. But, the stay is only temporary. Filing bankruptcy can stop the foreclosure sale of your house. Again, with a chapter 7 bankruptcy, this is only temporary. A chapter 13 bankruptcy can afford you more protection if your goal is to stop a foreclosure sale. Filing bankruptcy can stop the garnishment of your wages.
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This automatic stay will last until the following:
1. At the request of a creditor, the judge lifts the automatic stay.
2. The item of property is no longer belongs to the person filing for bankruptcy.
3. The debtor receives the discharge. This happens during when a chapter 7 bankruptcy is filed and a foreclosure and /or repossession is temporarily halted. After the debtor receives a discharge a creditor is then free to purse repossession and foreclosure on the debtor's property.
So, with an automatic stay, a bankruptcy can allow you to get your financial affairs together, provide you relief from harassing calls from creditors, and stop the garnishing of your wages. But, remember in the case of a chapter 7 bankruptcy these results are only temporary.
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