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Understand how the automatic stay works in bankruptcy

When you are struggling to pay your bills, there is a good chance that some will fall by the wayside. This can initiate collection calls that become bothersome after a bit. Sometimes, creditors will outright harass people, but this isn't acceptable. You probably just want the constant contact to stop. One option that you have to take care of the past due bills and the creditor calls is to file for bankruptcy.

When you file, the court issues an automatic stay. This is an order that prohibits creditors who are included in the bankruptcy from contacting you. They can't call you, send you mail, email you or stop by your home.

The automatic stay also prevents creditors from starting legal proceedings. This is helpful if your home is being foreclosed upon, but it doesn't provide a permanent solution. The same is true if you have a vehicle that is in danger of being repossessed.

Because you can't play favorites with who gets paid first in bankruptcy, the automatic stay helps to keep all the creditors even. They can't file claims against you in an effort to get paid first.

One thing to remember is that not all debts are eligible for the automatic stay. Money you owe to the IRS, past due child support, most student loans and repayments for pension loans aren't covered by an automatic stay. You do still have to pay these debts because they can't be included in a bankruptcy petition.

Before you file, be sure that you know your rights and responsibilities as you seek a fresh start through bankruptcy. These are important during the process because any missteps might mean your debts aren't discharged.

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