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Common Concerns & Questions About Bankruptcy

Stopping creditors during bankruptcy process

| Oct 24, 2019 | Creditors' Rights |

Financial problems are fairly common in Texas. While some individuals are able to overcome these challenges with slight changes to their spending, others must seek out other debt relief options like bankruptcy. Bankruptcy may be an especially appealing option for those facing constant harassment from their creditors. Filing for bankruptcy can help an individual escape burdensome debt while also stopping creditors from engaging in harassing behaviors.

This is because filing for bankruptcy triggers an automatic stay. This protects a debtor from collection actions taken by creditors and bill collectors. Additionally, it stops any lawsuits that have been filed by a creditor, collection agency, government entity, or any other individual or business seeking money owed.

An automatic stay can be beneficial in other ways, too. It can stop utility companies from turning off an individual’s phone, gas, electric, or water. It can also stop home foreclosure proceedings. It can also prevent an eviction from occurring, a government agency from taking back overpayments of public benefits, and wage garnishments.

It should be noted that an automatic stay cannot address certain financial issues. This includes certain tax proceedings, child support, criminal proceedings, and loans from a pension. Additionally, if a debtor filed for bankruptcy in the previous year, then any automatic stays associated with the current filing will be terminated.

An automatic stay is not an ultimate solution, but it can provide a debtor with relief while he or she navigates the bankruptcy process. Hopefully, by the time they finish that process a debtor will shed debt and secure the fresh financial start to which he or she is legally entitled.