One of the primary benefits of filing for Chapter 11 bankruptcy is that you’ll likely receive an automatic stay. The stay goes into effect as soon as a North Carolina judge receives your bankruptcy petition, and it will typically remain in place until your case is discharged.
Most collection activities must come to a halt
Once the stay goes into effect, creditors are prohibited from contacting you about outstanding debt balances. Instead, they must contact your attorney if they need more information about any accounts in your name. Furthermore, creditors are generally barred from repossessing property, freezing a corporate bank account or taking legal action until the order is lifted. A commercial bankruptcy attorney might be able to provide more information about the types of protection that you might receive after filing for bankruptcy.
Why an automatic stay might be lifted
An automatic stay might be lifted if there is reason to believe that you filed for protection from creditors in bad faith. It might also be lifted if you have no material interest in a given asset. For instance, if you don’t intend to make payments on a commercial property loan, the mortgage company may be allowed to foreclose on the underlying collateral. Finally, you may lose this important protection if your case is dismissed for any reason.
If you’re having trouble paying business debts, it may be a good idea to file for bankruptcy. An attorney may be able to talk more about the process of filing and the benefits of doing so. He or she may also provide more insight into what might happen to your company after a case is discharged.