Perhaps the greatest source of relief for distressed debtors who file bankruptcy is what is known as the automatic stay. As soon as your bankruptcy attorney files your petition, the automatic stay goes into effect – meaning that creditors must stop all their collection efforts, including phone calls, letters, lawsuits or anything else they are doing to try to collect on a debt. The automatic stay also prevents secured lenders – those who hold your mortgage or car loan note – from repossession, foreclosure or selling any of your property. However, when it comes to secured creditors, these benefits are temporary – if you do not keep up with your payments after your bankruptcy is over, secured creditors can still proceed with a foreclosure, repossession or sale of your property. There are also some exceptions to the automatic stay, including alimony, child support, student loans, most taxes and criminal restitution. If you have filed Chapter 7 bankruptcy, the automatic stay terminates as soon as your Chapter 7 bankruptcy is discharged (closed). If a majority of your debt is unsecured (credit card debt, medical bills, etc.), you will not care that the automatic stay has expired because that debt will have already been wiped out through the Chapter 7 bankruptcy process. However, if most of your debt is secured debt, then you should consider filing Chapter 13 bankruptcy, which extends the automatic stay throughout your repayment period of three to five years. Plus, the automatic stay in Chapter 13 bankruptcy filings also protects anyone (spouse, parent, etc.) who may be responsible for the same debt as you are.
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