When a person is thinking about filing chapter 7 bankruptcy, they may be deep in unsecured debt. Unsecured debts are any type of credit that requires a promise to pay like utilities, car payments and credit cards. Chapter 7 eliminates these debts often without having to give up assets such as a car. Chapter 7 bankruptcy effingham county ga is a powerful option to obtain a financial fresh start.
What is an Automatic Stay in Chapter 7 Bankruptcy?
Chapter 7 also comes with an automatic stay. This is a power tool to stop creditors from continuing and starting any collection proceedings. For instance, an automatic stay prevents a creditor from filing a lawsuit against the person. They also can’t start or continue to garnish their wages. If a person has a civil judgment against them, it stops the creditor from collecting.
Chapter 7 Bankruptcy can Restore Some Forms of Credit
The automatic stay has the power to restore some forms of credit such as utilities. For instance, a person has their electric and gas turned off for non-payment. They file chapter 7 and include the amount they owe to the electric company, they can have their services restored. This means they don’t have to struggle to pay a large utility payment for their service to be turned back on at their home or apartment.
Using the Automatic Stay can be Done Immediately
A person doesn’t have to wait until the meeting of the creditors to use the automatic stay. The meeting of the creditors is one of the last steps to getting their chapter 7 granted. It is a meeting with a bankruptcy trustee and the person filing bankruptcy, called a debtor. Creditors are welcome to show up at the meeting. They can even challenge the bankruptcy case to get it dismissed.
The automatic stay is immediately available for the person to use when they file their petition. For example, the same day their petition is filed, they can contact the utility company to have their electric and gas turned on at their residence.
Automatic stay Can’t Stop Foreclosure Proceedings
An automatic stay isn’t as powerful as the one given in a chapter 13 bankruptcy. Chapter 13’s automatic stay can stop the foreclosure process at any stage before the property is sold. Chapter 7 bankruptcy can’t stop the foreclosure process. That is why many people wanting to save their home file chapter 13 instead of chapter 7.
Contacting an Effingham bankruptcy Lawyer about an Automatic Stay
A person wanting to file chapter 7 should contact an Effingham bankruptcy lawyer for help. Chapter 7 has many requirements to complete prior to filing such as completing a means test and credit counseling. A means test is required to determine whether a person is eligible to file chapter 7. If they fail the means test, they can only file chapter 13. This means repaying secured and unsecured debts each month for about five years.