Making the decision to file bankruptcy under Chapter 7 should not be taken lightly. The web of paperwork, requirements, rights and responsibilities can be difficult for most people to navigate on their own. Hiring a lawyer who specializes bankruptcy is usually the best option for most people and doing so can get a case filed quickly and efficiently. Not only that, the faster a debtor can file their petition with the courts, the sooner they can stop harassment from creditors with the automatic stay.

The Automatic Stay Helps Debtors

As part of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), the Automatic Stay rule was implemented in order to give creditors a chance to reorganize their finances during bankruptcy. After successfully filing for bankruptcy, a debtor can be protected against some common emergencies, such as utility disconnection, foreclosure, and eviction. In most cases, a debtor is also protected from the harassing phone calls and other collection proceedings of most creditors. However, be sure to provide all of your financial records regarding creditors to your Chapter 7 bankruptcy lawyer because failure to include all creditors in your filing may cause unwanted exceptions to this rule.

Creditor Rights and Responsibilities

Creditors are not without their own rights during bankruptcy proceedings. While the automatic stay rule is helpful to debtors needing to regroup their finances, creditors are able to file a motion to lift the stay. A request by a creditor may be granted for several reasons including continued home foreclosure proceedings when the mortgage holder is not making payments. A stay may also be lifted if the filing creditor can prove a failure to preserve or insure the property. However, until the motion is granted a creditor can be sanctioned by the courts for any attempt at contacting debtors to collect debts.

Exceptions to the Automatic Stay Rule

Unfortunately, the automatic stay rule does not protect consumers from every type of collection proceedings. Funds owed due to criminal proceedings or support cases are excluded from this rule and the courts may impose penalties for non-payment. Also, any lawsuit that arises after the bankruptcy petition is filed is not eligible for protection under the automatic stay rule.

For the most part, the automatic stay rule was implemented to protect debtors from the sometimes constant and aggressive collection tactics of lenders. If a consumer feels that filing for bankruptcy is their only option, doing so can stop harassment from most creditors. However, petitioners must remember to include all debts in their filing while also considering the items that may be excluded by a lender’s motion to lift the automatic stay.