The importance of a Chapter 13 bankruptcy stay

For an indebted resident of Mississippi or Tennessee, there are many advantages that come with filing for Chapter 13 bankruptcy. Sometimes known as a wage earner's plan, Chapter 13 essentially reorganizes a filer's debts into manageable payments that are made over a period of several years. In addition to discharging eligible debts after the repayment period is complete, Chapter 13 can also stop creditor harassment and stop foreclosure, among other benefits.

One of the prime benefits of Chapter 13 is what is known as an automatic stay. Filing for Chapter 13 typically automatically stays, or stops, certain actions against a debtor. For instance, a stay can put a halt to collection actions taken against a debtor or against the debtor's property. Fortunately for debtors, the stay, true to its name, arises automatically and doesn't require a separate judicial action.

A Chapter 13 stay means that creditors demanding money can no longer continue their lawsuits against a debtor. In addition, a stay prevents creditors from initiating new suits against the person who has filed for bankruptcy. Chapter 13 stays also mean that most creditors can't garnish a debtor's wages; a stay also prevents harassment since it generally puts an end to creditors' calls. In Chapter 13 bankruptcy, a stay can also protect a co-debtor through a provision that stops creditors from attempting to collect consumer debts from those who are liable along with the filer.

It's important to know that a stay might not stop every type of collection taken against a debtor. In addition, a stay is not permanent so it's crucial to know when the stay will begin and end so the debtor can take the appropriate actions to better their financial situation. A bankruptcy attorney experienced in Chapter 13 cases can be of assistance.

Source: uscourts.gov, "Chapter 13 - Bankruptcy Basics," accessed Dec. 11, 2015

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