Making the decision to file for bankruptcy is a complicated one, and it may not be your first choice when facing an excessive amount of debt. While there are many misconceptions about bankruptcy and what happens during this process, it is often a practical and beneficial way to deal with overwhelming debt. If you are thinking about how you could possibly achieve a better financial future, you may consider the benefits of consumer bankruptcy.
The automatic stay
One of the benefits of filing for bankruptcy is the automatic stay. This halts all collection efforts upon filing, stopping inconvenient and stressful actions such as wage garnishment, threats of foreclosure and more. This gives you some immediate relief, as well as provides you with the opportunity to focus on following the terms of your bankruptcy plan.
What does the automatic stay do?
The automatic stay stops creditors and debt collectors from continuing their effort to collect money from you for the payment of outstanding debts. If a creditor violates the automatic stay, it could be grounds for legal action. The following may help you understand the automatic stay and the benefits it offers to you through bankruptcy:
- The automatic stay is effective from the moment an Alabama applicant files for bankruptcy.
- In addition to halting collection efforts, it also stops court proceedings from moving forward.
- If there is a violation of the automatic stay, the debtor has the right to file a lawsuit against that creditor.
- There are times when creditors may petition a court to lift the automatic stay in order to collect payment.
- Debts not covered by the automatic stay include child support and spousal support payments.
- The automatic stay lasts for as long as the bankruptcy process lasts, and it stops if there is a dismissal of the case.
The automatic stay is only one of the many potential benefits bankruptcy offers individuals in Alabama who are struggling with debt. In addition to stopping collection efforts against you, it will also provide you with an organized way through which you can deal with your debt in an effective manner. For many, bankruptcy provides a way to move forward after a significant financial struggle, securing a better future with more stability.