Stopping credit collections
When you file for a bankruptcy (chapter 7 or chapter 13) the bankruptcy court issues an automatic stay. This order instantly goes into effect. The primary purpose of this automatic stay is to provide the debtor with “a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions”. To put it in simpler words, the automatic stay prohibits the creditors from pursuing their collection activities. It also restricts all forms of communication regarding the matter, including phone calls, emails, home visits and so on.
However, this automatic stay only temporarily stops the collection activities until the bankruptcy case is not dismissed. For instance, if you file for chapter 7, the automatic stay will remain in effect for the duration of the lawsuit. This is typically around three to four months. A chapter 13 takes around three to five years to be administered. Therefore, the automatic stay will protect your interests for as long as the case is pending in the court, provided you ensure timely payments according to the new repayment plan.
In some cases, the automatic stay will not go into effect at all or last only a period of thirty days. For instance, if you file two consecutive bankruptcies within a year, the automatic stay will not be triggered unless you prove in the court of law that the petition has been filed in good faith. Your bankruptcy lawyers in Sacramento can walk you through the process to halt creditors immediately.