The Automatic Stay Makes It Illegal for Creditors to Call You!

The moment you file for bankruptcy, an injunction known as the “automatic stay” goes into effect which prohibits most creditors from initiating or continuing their collection efforts, including lawsuits. If a credit card company has already filed a lawsuit against you to collect its debt, it cannot proceed any further while the automatic stay is in effect without receiving permission from the bankruptcy court, something they normally don’t have legal grounds for. This is a powerful law that makes any further collection activity by the creditors illegal. Specifically, the automatic stay will:

  • Stop any further collection activity, including phone calls, foreclosure, repossession, lawsuits, wage garnishment and utility shut-offs.
  • Is automatic and goes into effect the instant your bankruptcy is filed.
  • Is temporary. The stay stays in effect until your case is closed or dismissed. Also, if a debt was discharged through bankruptcy, the creditor is forever prevented from any further attempts to collect on the debt.
  • It applies to debts that existed at the time you filed for bankruptcy.

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