There is no scarcity of reasons why people enter a debt spiral, but the majority of them are unable to escape it without a windfall, and for a large percentage of these individuals, bankruptcy appears to be their only option. This is primarily due to the automatic bankruptcy stay.
What does automatic remain in bankruptcy mean?
A stay is part of the legal protection afforded to the debtor when a bankruptcy petition is lodged in a court with jurisdiction. This indicates that you are exempt from repaying debts incurred prior to filing until the case is resolved. Once you apply for bankruptcy, the stay automatically goes into effect. Your creditors are no longer able to contact you directly via phone or mail. If they want to collect their money, they must file a court petition for relief.
Typically, creditors will petition for relief in an effort to claim at least a portion of your property to compensate for their losses. Occasionally, petitions for relief from the automatic stay may be submitted for other legal claims, such as unpaid alimony or child support. In most instances, the stay provides debtors with a respite from the near-constant harassment of creditors seeking to recover their money.
The automatic stay is pertinent to both chapter 13 and chapter 7 bankruptcies as soon as the filing process is complete. The duration of the stay differs, however, and will extend throughout the entire repayment period for chapter 13 bankruptcy if the debtor makes all payments on time. Once payments have been missed, the creditor may file for relief from the automatic stay, allowing collection efforts to recommence.
If you are making payments under a chapter 13 repayment plan and experience an abrupt financial setback, informing your creditors and renegotiating through your attorney is likely the best course of action.
" - https://www.affordablecebu.com/
