Times have been tough lately for many in New Jersey. Some may be in such financial distress that they find they cannot pay their mortgage, credit card payments and other debts. This is distressing, especially if calls start pouring in from debt collectors or if your home is being foreclosed upon. However, there is one temporary solution to these woes: the automatic stay as part of filing for bankruptcy.
What is the automatic stay?
If you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, the court will issue an “automatic stay.” This keeps creditors from making debt collection efforts on what you owe. It will stop foreclosure proceedings, at least for a while. The automatic stay gives you the time needed to catch up financially or to go through the entire bankruptcy process without incurring further penalties based on unpaid debt.
Is the automatic stay permanent?
The automatic stay may not be permanent. There are ways creditors can have it delayed or lifted. One way is if there is no collateral on the assets at issue. The second, specific to Chapter 13 bankruptcy, is if it is determined that the automatic stay is not necessary for reorganization. Bad faith on the part of the debtor can also lift the automatic stay. Creditors can file a motion for relief, and this can lift the automatic stay as well.
Learn more about your options
The automatic stay is a great way to help you get on your feet. Filing for bankruptcy, whether it is Chapter 7 liquidation bankruptcy or Chapter 13 reorganization bankruptcy has an undeserved negative reputation. In fact, filing for bankruptcy is often the safety net a person needs to shed debts they cannot ever repay and move forward on fresh financial footing.