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What is the automatic stay in a bankruptcy proceeding?
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What is the automatic stay in a bankruptcy proceeding?

On Behalf of | Jan 4, 2021 | Bankruptcy & Asset Protection

Bankruptcy is an intimidating word for many Florida residents. Though many people have heard of it, they may not truly know what is involved in its processes. While bankruptcy can be cumbersome, it is a useful legal process for those who are in need of help from getting out from under significant financial burdens.

All individual advice on bankruptcy and its forms and requirements should be sought from knowledgeable and trusted legal representatives. This informational post will discuss one element of bankruptcy – the automatic stay – and what it does for bankruptcy filers. No legal advice or guidance is provided in this post.

Putting the breaks on collections and creditors in bankruptcy

Bankruptcy is sometimes a process that debtors reach when they are at the end of their options for sustaining financial self-sufficiency. When a person cannot pay their mortgage, stay on top of their credit card bills, or cannot put a dent in a large loan, they may turn to bankruptcy. One reason that bankruptcy is a useful option is because of the automatic stay.

The automatic stay begins when a person files for bankruptcy. It puts a hold on collection actions by creditors and prevents debtors from suffering harm due to their insolvency. For example, the automatic stay can help slow or prevent evictions or foreclosures, and may help keep utilities running to debtors’ properties.

The automatic stay is not permanent

Individuals should know, though, that the automatic stay is not a long-term fix for their financial problems. It can give a debtor breathing room as they begin the bankruptcy process, but the debtor remains liable for their debts and obligations. Legal financial obligations like child support or criminal penalties cannot be eradicated through the automatic stay.

Bankruptcy is not for everyone, and choosing to start bankruptcy is a big decision. Before a Floridian decides to pursue bankruptcy to address their financial needs, they can discuss their options with a trusted local bankruptcy and debt relief attorney.