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A closer look at the automatic stay during bankruptcy

Both primary types of personal bankruptcy protection, Chapter 7 and Chapter 13 bankruptcy, and including any type of bankruptcy relief, serves as a resource to help struggling consumers protect what they care about a enjoy a fresh financial start. The automatic stay that is associated with both types of personal bankruptcy protections, as well as business bankruptcies, can help provide valuable breathing room for the struggling consumer while they seek bankruptcy relief.

In general, Chapter 13 bankruptcy serves as a reorganization bankruptcy option for struggling consumers while Chapter 7 bankruptcy serves as a liquidation bankruptcy option that allows the filing party to liquidate non-exempt assets to repay creditors. Certain property is exempted, or protected, from the process and there are requirements to be eligible for either type of bankruptcy that anyone contemplating bankruptcy protection should be familiar with.

Once the filing party files for bankruptcy, the automatic stay goes into effect which prevents creditors from pursuing creditor collection actions against the filing party while the bankruptcy process progresses. This allows the filing party time to work through the details of their bankruptcy process without the pressure of creditors and with the bankruptcy court whether it be the reorganization process and development of a repayment plan or the liquidation process.

Additionally, the automatic stay may be able to provide specific help and relief with foreclosure, eviction wage garnishment, utility disconnection and other concerns the filing party may have. There are a variety of complexities associated with the bankruptcy process so filing parties should be as familiar as possible with the way the process works so they are in the best position possible to protect themselves and enjoy debt relief.

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