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Tuesday, February 24, 2009

What you need to know about the Bankruptcy automatic stay

By Josh Ramos

For anyone experiencing the burden of high credit card debt (or other kinds of debt), finding a way out can be an incredibly stressful problem that can wreak havoc on your family life and health. Is there any light at the end of the tunnel?

Well, one option that you will want to consider is bankruptcy, even though it isn't appropriate in all situations. One of the benefits of bankruptcy is the automatic stay, which actually makes it illegal for creditors to try to collect the debt until you have finished your bankruptcy application.

Automatic stay is one of the most powerful and reassuring provisions of bankruptcy. Once you file for bankruptcy, there is an automatic court order which prevents companies from taking any further action against you until your case is resolved. Creditors cannot repossess your car, or begin foreclosure proceedings on your house, or try to garnish your wages through your employer.

In fact, your creditors are not supposed to even contact you if you have initiated bankruptcy proceedings. If they do, they will have to answer to a Federal bankruptcy judge.

The automatic stay is a temporary provision that protects you from bill collectors. Whether you have to pay any of your bills in the future depends on the outcome of your bankruptcy case. But you definitely have at least a temporary reprieve from having bill collectors harassing you all the time.

One thing you may be worried about is whether the new bankruptcy law makes you ineligible to file for bankruptcy. The truth is that most people who would have qualified previously are still eligible to declare bankruptcy.

Your bankruptcy lawyer can explain some of the specifics such as having to undergo credit counseling and attend financial management classes as a requirement for bankruptcy. When it's all said and done, bankruptcy is still an option for many people to consider in order to achieve a fresh financial start.

Bankruptcy remains a viable option for many people, and you should speak to a lawyer if you're considering this option. Firstly, however, you should continue reading more articles like this one to get as much information as possible before contacting your attorney.

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