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Automatic stays provide some protection from creditors

People who are tired of checking the mail or answering the phone because of debt collection attempts might appreciate one of the immediate impacts of bankruptcy – the automatic stay. When you file for protection, the court issues an order that prevents creditors from trying to collect on your bills.

The automatic stay varies a bit based on what type of bankruptcy you file. Under Chapter 7, they can't contact the individuals named in the case, but they might try to collect from co-owners of the accounts. In Chapter 13, the creditor can't try to collect on the debt at all because the repayment plan will pay for the debt.

There are time limits to the automatic stay. Throughout a Chapter 13 bankruptcy, the automatic stay remains in place for all debts that are part of the case. Once the claim is discharged, the creditor is considered paid off, and they can't commence repayment efforts again.

In Chapter 7, you have 30 days from your filing to provide a Statement of Intention to let the court and creditor know what you are doing with the property. If you don't turn this in or you choose to surrender the property, collection attempts can resume on day 31. This can include repossession or other legal methods.

The automatic stay is only one benefit of filing. Ensure that you think about the ways that it can impact your situation so you can make an informed decision. Bankruptcy is here for consumers who need to have a fresh financial start so they don't have to deal with overwhelming debts.

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