What Will it Take to Get My Creditors to Stop Calling?
While the details are different from case to case, the basic situation preceding a need to file for bankruptcy is consistent: there just isn’t enough money. Whether somebody falls behind due to an injury, the loss of a job, or another reason, they can count on one thing: the creditors are going to start calling. And calling. And calling. For many people, the constant contact from creditors is among the most stressful and anxiety-inducing aspects of their financial issues. Is there any way to make them stop?
The Automatic Stay
If frequent contact from creditors has been poisoning your daily life with worry and dread, declaring bankruptcy has a pleasant surprise in store for you. It’s called the automatic stay, and it’s your new best friend. Under Section 362 of the U.S. Bankruptcy Code, the automatic stay prevents creditors from contacting you the moment you file the petition for bankruptcy. In some cases, the relief this provides is even the catalyst for deciding to declare bankruptcy. There are two important things to note about the automatic stay:
- The good news: putting the brakes on creditors is not the only thing the automatic stay can achieve.
- The bad news: the automatic stay can be contested by creditors, and in the worst case scenario, it can actually be lifted.
The automatic stay has considerable benefits — but it also has its limitations.
What the Automatic Stay Can Do for You
The main effect of the automatic stay is that your creditors become legally obligated to refrain from contacting you. When you file a petition for bankruptcy, you will be required to list your creditors, who will then be contacted and informed of the bankruptcy proceedings. They may continue to contact you in the interim, but once they are aware of the situation, the harassment should cease.
In addition to silencing creditors, the automatic stay has other benefits. It has the power to:
- stop wage garnishment
- prevent a shut-off to utility services
- postpone foreclosure and eviction
Limitations of the Automatic Stay
While the automatic stay is a powerful aid, it also has its limitations. There are actions that it cannot halt or prevent, such as:
- lawsuits pertaining to child support or alimony
- hearings, fines, or sentences related to criminal charges
- auditing from the IRS
Additionally, it should be noted that the automatic stay is not permanently secured once invoked: creditors who want to keep collecting can attempt to have the stay lifted. In order to do this, they will file a motion with a court, at which point the debtor, you, will be notified and given the opportunity for a hearing. Creditors might seek to lift the automatic stay due to debtors failing to make repayments on secured debts, or if they feel that they are unlikely to continue receiving payments from the debtor in the future.
If you or a loved one is struggling financially and considering bankruptcy, you don’t have to face the challenge alone. Contact Young, Marr & Associates immediately to schedule a free consultation with our experienced bankruptcy attorneys, or call us at (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania.