When you have high debts from multiple creditors, you can receive constant calls from collection agencies. They may call you multiple times a day to try and collect your debt. But when you file for bankruptcy, the automatic stay prevents this harassment.
When you file for bankruptcy, you seek relief from creditors calling you. Whether you file for a Chapter 13 or a Chapter 7, the court will implement an automatic stay that temporarily orders creditors to stop trying to collect what you owe.
Preventing creditors from collecting
An automatic stay is a court order that forbids almost all debt collectors from pursuing your debt. As soon as you file for bankruptcy, the stay automatically goes into place. It will last as long as your bankruptcy is active.
Making sure each creditor is equal in bankruptcy
This action is meant to shield you from harassing phone calls while also making sure that no creditor gets favorable treatment. The bankruptcy court will try to treat each creditor equally as they decide how much of your debt they will discharge. The stay prevents one creditor from making you pay more to them than the bankruptcy court allows.
Not all debt is exempt from a stay
Some of your debt can be exempt from the automatic stay. If you are behind on child support, a family court can still contact you about missing payments. Or if you owe the IRS taxes, they can try to collect while you are in bankruptcy.
Giving you relief
An automatic stay can give you a temporary break from creditors harassing you. While it will only last as long as you are in bankruptcy, you can use that time to save money or pay off your debt through a Chapter 13 repayment plan.
The stay is one way that bankruptcy can offer you some relief.