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What is an automatic stay?

Many Americans are overwhelmed with credit card debt, medical bills, mortgages and other expenses that they cannot keep up with. In fact, close to one million people file for bankruptcy every year in an attempt to reclaim control over their finances. If you are one of the many who face this problem, you may find yourself the target of collector and creditor phone calls. In some cases, collectors can use harassing measures to obtain a payment on the account. Once you file for bankruptcy, however, an automatic stay is put in place. This measure is designed to keep collectors from being able to contact you regarding your unpaid balance.

The Fair Debt Collection Practices Act prohibits collectors from using certain tactics to reclaim their money. Tactics include calling at all hours of the day and night, using profane language, threatening legal action, inflating a debt or threatening to hurt family members if the debt goes unpaid. Surprisingly, some companies have been guilty of using these measures on debtors. Fortunately, after you have turned in your bankruptcy paperwork, the creditors listed on your documentation are contacted and given an automatic stay. At this point creditors are no longer able to do the following:

  •          Garnish your wages
  •          Start or continue lawsuits
  •          Call at all hours of the day and night

It is important that you list all of your creditors in your bankruptcy paperwork, as these are the agencies that will be contacted regarding the automatic stay.

This information is intended to educate and should not be taken as legal advice.

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