It is stressful to know that your income is not currently high enough to cover all of your expenses. It is even more difficult to deal with the aggressive attempts by companies that you owe money to or that have purchased your debt to compel you to pay when you don’t have the income.
Creditors and collection agencies might call you at home or at work every day. They might send you letters and start adding fees and extra charges to your account, increasing the balance and making it even more difficult for you to regain control over your finances.
Bankruptcy is one powerful tool to end aggressive collection tactics and help you regain control over your financial circumstances. What are the two most significant ways that bankruptcy helps you end creditor harassment?
An automatic stay puts an end to calls and even pending lawsuits
Bankruptcy proceedings can take quite some time to complete. Depending on the kind of bankruptcy you file, it might be several years before you receive the discharge of the debts included in your bankruptcy.
If you had to wait until you received your discharge to get any protection from creditors, you might find yourself in a situation where your income drops due to wage garnishments and your finances spiral even more out of control.
As soon as you file your initial petition for bankruptcy with the courts, you receive an automatic stay on all collection activities. Many creditors will check public records to make sure that they don’t attempt to contact someone who has filed for bankruptcy. However, if you get a call after you file for bankruptcy, typically you only have to advise the person on the line about your pending bankruptcy to get them to end the call and stop calling you entirely.
Your discharge lets you leave specific debts in your past
At the end of the bankruptcy process, provided that you fulfill all of your obligations and comply with requirements from a court, you will potentially receive a discharge of the unsecured debts included in your bankruptcy.
Credit card balances, medical debts and other outstanding bills will no longer legally require repayment. Additionally, creditors will not be able to contact you to try to push you into repaying those debts even if your financial circumstances improve and you have more income or capital available to you.
Bankruptcy can be a valuable tool for those dealing with the stress of collection activities by creditors, and the sooner someone files, the sooner they benefit from the automatic stay and the sooner they could potentially qualify for the discharge of their debts.