When you file for bankruptcy, the court might order all the debt collectors to stop the debt collection activity from you. This is the simplest definition of an automatic stay. The automatic state goes into action as soon as you file for bankruptcy. There are lots of things included in automatic stays which the debtor cannot sell to collect your debt amount.
However, never think that the automatic stay applies on all of your assets and every collection activity. Letsunderstand more about automatic stays in this small guide to automatic stays.
Protection an Automatic Stay Can Provide You With
When an automatic stay is issued at the time of bankruptcy filing, the debt collectors are stopped from collecting debt from you through any means. That applies unless there is an exemption. The automatic stay applies unless your bankruptcy case is it either resolved or dismissed, or the stay is lifted by the court. If your bankruptcy case is successful and all of your debt is destroyed, the debtor would not be allowed to collect any debt from you.
Secured Creditors Might Get The Stay Lifted
If you have borrowed any money from secured creditors, they can request the court to lift the automatic stay. If the court lift the stay, the creditor will be able to collect the debt from you, or they might repossess your asset.
This is true unless you and your creditor can reach an agreement to repay the debt even after you have filed for bankruptcy.
What You Filed For Bankruptcy Recently?
If it is your second bankruptcy filing within the same year, only a 30 day stay will be applied. However, if it is your third time within the same year, no stay will apply to your bankruptcy case. However, you can always request the court to provide you with an automatic stay, or even extend the time limit.
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