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Stopping Creditors
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Common Concerns & Questions About Bankruptcy

How can a debtor be protected by an automatic stay?

On Behalf of | Jun 21, 2018 | Creditors' Rights |

Texas debtors who are facing a litany of issues due to financial struggles might feel overwhelmed. Once their debts have reached the juncture at which they can no longer pay them, it is inevitable that the collection calls will begin. This only compounds the fear that a debtor will need to address in addition to the financial woes. Fortunately, there are alternatives to put a stop to these calls and get back on better financial footing.

Bankruptcy is a way to improve one’s financial situation as well as stopping the collection calls through an automatic stay. When a lawsuit is filed by any entity seeking payment on a debt, an automatic stay puts a stop to it. It is also useful for those who are close to eviction, foreclosure, or are dealing with utilities being turned off for lack of payment.

People who are drowning in debt might fall behind on rent. That can lead to a landlord seeking an eviction. It is important to remember that if the landlord has a wrongful possession judgment against the tenant, then the automatic stay cannot prevent eviction. Also, the automatic stay might provide a finite amount of time for as long as weeks to stay in the residence.

Foreclosure on a home that has a mortgage can be stopped with an automatic stay. Even then, the banks might find a strategy to continue the proceedings. This is where a Chapter 13 bankruptcy proceeding is preferable to a Chapter 7 bankruptcy proceeding. Utilities are imperative to living. Without gas, electric and water, life can be problematic. The automatic stay can give the person a minimum of 20 days where the utilities will stay on.

While the automatic stay is often just a chance for the debtor to get a breather from the constant pressure of collection calls, bankruptcy is a method of getting relief from the debt itself. Therefore, one may want to consider bankruptcy as one option to improve one’s financial situation.