No other form of debt elimination includes the power of the automatic stay like bankruptcy does. When a bankruptcy petition is filed, the automatic stay goes into place stopping all collection activity against the debtor. How it works is when an individual is filing bankruptcy they will have to fill out the bankruptcy petition that has numerous schedules included. One of the schedules will have a list of all of the creditors of the individual filing for bankruptcy. The individual filing is required to submit a list of current addresses of the creditors so that the court can notify the creditor of the pending bankruptcy. Usually, it will take a couple of weeks for the creditors to be notified, but if they call, all the individual needs to do is give them the case number and the creditor will stop calling knowing that the automatic stay is now in place.
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The automatic stay is so powerful that it not only stops collection but it will also stop foreclosure, lawsuits, judgments and wage garnishments. It's much better for an individual to not wait until the point of getting sued by their creditors to file bankruptcy, but if it happens the lawsuit will stop immediately. This is pretty good news for someone that is being pursued by their creditors relentlessly. Many people end up filing bankruptcy because they can no longer take the constant calls from their creditors. For those creditors they feel it necessary to continue harassing the debtor, the debtor can take legal action against them. In the least, the creditor will get sanctions against some from the bankruptcy court. For the flagrant violators, the bankruptcy attorney can ask for legal fees and damages suffered due to their harassment.
Today, creditors have become more and more aggressive in their debt collection tactics. For this reason, many people get pushed into bankruptcy because they can't take the constant harassment of the relentless creditors. Many creditors are second generation debt holders and bought the debt for pennies on the dollar. They really have nothing to lose and only gain so they really push the limits. Many individuals that end up filing bankruptcy get pushed over the edge by one of these rogue creditors that will not stop calling. Even though they are violating all kinds of laws, most people become so beaten down they just stop answering their phone. For most individuals filing bankruptcy, the automatic stay is a saving grace that allows them to live once again and answer their phone.
With the real estate market still wallowing, we can expect to see many more foreclosures in the future. There are good number of individuals that would be able to keep their home from foreclosure if they had a way to eliminate their other unsecured debts. Because of this, Chapter 13 bankruptcy has found a new popularity with people in debt. The good news is, whether it is Chapter 7 or Chapter 13, both chapters share of the power of the automatic stay.
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