What Collection Activity Does a Bankruptcy Stop?

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The automatic stay is a powerful benefit of filing a bankruptcy case. As soon as the stay is effective, your creditors are prohibited from taking further collection actions against you. As a result, a bankruptcy filing can be helpful when you are facing financial emergencies, including:

  • Foreclosure. The foreclosure process is a collection activity halted by your bankruptcy filing. At a minimum, your filing can buy you some time to negotiate with your mortgage lender or at least remain in your home for a few additional months.
  • Collection lawsuits. If a creditor, such as your credit card company, has filed a lawsuit against you, your bankruptcy filing will halt the litigation. In many cases, the debt underlying the collection lawsuit can be discharged in your filing.
  • Garnishment. Garnishments against your wages or your bank account will immediately halt when your Chapter 7 or Chapter 13 case is filed. You may also be able to discharge or eliminate the debt linked to the garnishment action, which means you are no longer liable to pay it.
  • Eviction. Depending on whether your landlord has obtained a judgment for possession against you, the eviction process may be halted by your bankruptcy filing.

If you are struggling financially and facing one or more of the above situations, it is time to contact us for a free initial consultation. Let one of our experienced bankruptcy attorneys help you determine the best strategy for obtaining the debt relief you need.

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