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Bankruptcy and the automatic stay

On Behalf of | Nov 2, 2021 | bankruptcy, blog | 0 comments

Colorado consumers who have become overwhelmed by debt often fall behind on their payments. When creditors start asking for payments, these calls can cause increased stress and anxiety for debtors. One of the benefits of filing for bankruptcy is the automatic stay, which can put an end to almost all collection efforts.

When does the automatic stay go into effect?

The automatic stay goes into effect as soon as a bankruptcy case is filed. Your creditors will be notified about your bankruptcy by the court, and they will be barred from collecting or attempting to collect any of your debts.

If a creditor does contact you after your bankruptcy case has been filed, you can simply let them know that you have filed for bankruptcy. They should stop collection efforts immediately since continuing to contact you would be against the law.

Your creditors may not receive official notice about your bankruptcy filing for a few days. However, the automatic stay still provides immediate protection, so any liens or wage garnishments that were issued during the automatic stay should be reversed.

Are all debts included in the automatic stay?

All debts that are included in your bankruptcy filing are included in the automatic stay. If you incur any new debts after your bankruptcy case is filed, these creditors are allowed to contact you and collect on those obligations. The automatic stay may not protect co-signers who did not file for bankruptcy with you.

How long will the automatic stay last?

If a creditor decides to seek relief from the automatic stay, it could file a petition with the court. However, this doesn’t happen in most cases, and you can usually enjoy protection from collection efforts until your bankruptcy case is completed.