When you file for bankruptcy, if you’re facing different collection efforts or foreclosure, one thing that happens is that an automatic stay is put on those cases.
An automatic stay can be very helpful, but you must make sure that you know exactly how it works. Let’s break down a few of the key points.
It is a pause on the proceedings
When an automatic stay is in place, the foreclosure or other collection efforts have to pause. They’re not ended entirely, but you have to be given time to work through your bankruptcy case first.
The automatic stay is temporary
The biggest thing to remember is that this is just a temporary thing that happens while you sort out your bankruptcy. Do not assume that this means that they can never foreclose or take your assets. Those cases can start again after the bankruptcy concludes.
It may help you avoid collections
Even so, the automatic stay can help you avoid losing your home and things of this nature, in the sense that it allows you to use bankruptcy to eliminate some of your debt. This may get rid of the collection efforts entirely, or it may simply fix your finances so that you’re no longer in danger of foreclosure.
This whole financial process can get to be very complicated, but rest assured that you do have options, and make sure you take the time to look into them carefully. Debt can be very stressful, especially when it’s threatening to change your life, but there are always things that you can do to get a handle on it.