Having difficulty paying monthly bills is not rare in the U.S. In fact, according to a recent report, upwards of 70% of Americans regularly struggle to manage medical debt, credit card bills, utility expenses and housing costs.
If you have fallen behind financially, you may also have to put up with a barrage of calls from creditors or collections agencies. While filing for bankruptcy may put you on the path toward a positive financial future, it should also stop harassing phone calls.
The bankruptcy automatic stay
When you file for bankruptcy, you immediate receive an automatic stay of most collections activities. This means your creditors cannot to contact you while the stay is in effect. The automatic stay may stop the following, at least temporarily:
- Foreclosure on your home
- Eviction from your rented home
- Repossession of your car
- Disconnection of your utilities
- Garnishment of your wages
While creditors may ask the bankruptcy court to lift the automatic stay, doing so takes time. Therefore, the reprieve you receive from the automatic stay may give you sufficient time to plan for the consequences that often accompany falling behind on bills.
Some important exceptions
Even though the automatic stay likely applies to many of your outstanding debts, it does not cover everything. Among others, the automatic stay may not stop the following:
- Child support payments
- Criminal proceedings
- Some tax-related collections activities
Determining whether these exceptions apply to you may not be a straightforward endeavor. Even if they do, though, using the automatic stay to stop other collections activities may allow you to focus on matters that fall outside the stay order.