It's difficult to know how to handle outstanding debt. If your creditors are pressing you or threatening to take legal action against you, you may soon face wage garnishment or a lawsuit.
Most people who find themselves here must seriously consider filing for bankruptcy. This debt relief avenue can have many benefits. In particular, an automatic stay may help you with creditor actions.
After filing for bankruptcy, an injunction known as the automatic stay goes into effect. This stay prevents creditors from trying to collect your debt.
That means they can no longer call you, send letters or collect your checks from work in an attempt to get you to pay your outstanding balances. If you are at risk of losing your home to foreclosure or other property to repossession, the automatic stay also prevents these actions from moving forward.
Not a dream fix
Though the automatic stay can be helpful, bankruptcy is a complicated procedure, and creditors do not have to sit back and accept that they can no longer take action against you. In fact, a creditor could file a request with the court to have the automatic stay lifted in order to continue collection actions. Under certain circumstances, the court could grant this request.
Additionally, the stay does not last indefinitely. For those in need of more permanent protection of a home or other non-exempt assets, certain types of bankruptcy can help.
Though the automatic stay may not solve all your problems, this injunction going into effect as part of your bankruptcy filing still shows that you are moving in the right direction.
Your bankruptcy case may help you address your debt overall and help you reach a more stable financial future. To learn more about which type of bankruptcy is best for you to file, contact a California bankruptcy attorney for help.