Once you start to lose control over your finances, it is often difficult to regain it. If your finances have spiraled out of control to the point where you are fielding constant calls from creditors or losing part of your paycheck to wage garnishment, you may be seeking a way out.
Many Kentucky residents facing similar circumstances find relief by filing for bankruptcy, which starts something called an automatic stay. What is the automatic stay, and how does it offer you protection from creditors?
The automatic stay period
Once you begin a formal personal bankruptcy case, the automatic stay period takes effect. During this time while your case is ongoing, many, but not all, of your creditors must stop coming after you. The length of the automatic stay period depends on whether you file for a Chapter 7 or Chapter 13 bankruptcy, among other variables.
With a Chapter 7 filing, the stay period often lasts between about 90 and 120 days. With a Chapter 13 filing, it may last through the duration of your repayment period.
Protections allowed through the automatic stay
Once the automatic stay period takes effect, you no longer have to field calls and communications from water or electric companies. If they have threatened to disconnect your services due to nonpayment, they may not do so during the stay period. Wage garnishments also cease during the automatic stay period. Foreclosures and evictions also stop during this span.
While bankruptcy’s automatic stay stops many creditor communications, it does not necessarily free you from all financial obligations. If, for example, you pay child support, you must still make those payments while your bankruptcy case is ongoing.