Many Indiana residents and people across the nation struggle with overwhelming credit card debt, medical expenses and mortgages. It is difficult to find your way out of financial turmoil, especially when you can barely make the minimum payments needed to stay afloat. If you fall behind on your bills, it is not unusual for creditors to call at all hours of the day and night until you make your payments.

Fortunately, an automatic stay may guard against creditor’s harassing calls regarding late or missed payments. The U.S. Courts initiate a stay once you file Chapter 7 or Chapter 13 bankruptcy paperwork.

How does an automatic stay work?

It is important to keep in mind that the automatic stay only affects creditors listed on your bankruptcy paperwork, so be sure to include all creditors when filing. Once an automatic stay is in place, creditors are unable to do the following:

  • Garnish wages
  • Initiate or continue to pursue a lawsuit
  • Make demanding phone calls at all hours of the day and/or night
  • Threaten to take property, children or pets away
  • Send mail, email or correspond using any other means

The Fair Debt Collection Practices Act restricts collection agencies and creditors regarding the techniques used to collect a debt. In some cases, creditors may try to inflate a debt, use profanities or disguise themselves as attorneys when they call seeking payment for a debt.

Know that creditors cannot engage in these practices, and violators may receive penalties. Knowing your rights is the only way you can adequately protect them.

Are there restrictions on the automatic stay?

While some automatic stays are in effect until bankruptcy dismissal, others are short term depending on the circumstances of the case. Furthermore, certain financial obligations, such as child support payments and school loans, are not covered under the automatic stay.

This information is intended to educate and should not be taken as legal advice.