One of the primary benefits of filing for bankruptcy is that you have access to the automatic stay. Typically, this is put into place the moment that your petition is received and typically remains in place until after your case is resolved. If the stay is violated for any reason, you may be able to take legal action against your Colorado creditors.
What the automatic stay may do
After the stay is put in place, creditors are prohibited from engaging in any type of debt collection activities. This means that you won’t receive letters or phone calls regarding an outstanding balance. It also means that you won’t have to worry about your car being repossessed or your home being foreclosed on. Any lawsuits that are pending will be temporarily suspended until your bankruptcy case has been resolved.
Other potential benefits of an automatic stay
The fact that creditors can’t do much to force you to pay your debts means that you have leverage to renegotiate existing loan terms. It’s possible that a creditor will accept a lump sum payment to settle the balance for less than you currently owe. Other potential resolutions include rolling past due payments back into the loan or surrendering your car without any further penalties or obligation to pay.
A stay may be removed
A stay may be removed if you have previously filed for bankruptcy. It’s also possible that the stay will remain in place for a limited period of time as opposed to throughout your case. Finally, this protection may be lifted if there is reason to believe that you filed in bad faith or if a creditor can prove that allowing to remain in place causes an undue hardship.
If you’re struggling to pay your debts, filing for bankruptcy may help you regain control of your finances. In addition to potentially preventing property from being taken, it may allow you to have debts eliminated or forgiven in a timely manner. A Chapter 7 case usually takes no more than a few months to complete.