In fact, you don’t even have to file for bankruptcy to prevent creditors from contacting you. All you have to do is tell them in writing that you don’t want them to call you. All they can do after that is send you a final request letter before filing a lawsuit against you.
However, once you file for Chapter 7 bankruptcy, your creditors, both guaranteed and unsecured, are automatically prevented from trying to collect what you owe them. This is called an “automatic” residence because the court issues this order on its own initiative without your asking it. This is to give you peace of mind and to ensure that the bankruptcy trustee, and not your creditors, will decide what you should keep. Even loans that cannot be disbursed are subject to auto stays.
The time of stay applies
Credit cards, medical debt, attorney fees. The creditor cannot bring a lawsuit against you or continue with the old one.
Utility termination. The utility company may not terminate your service for 20 days after you apply.
Overpayment of public benefits. The government cannot reduce your current payment to cover what you owe.
IRS liens.
Foreclosures initially stay but will be lifted if you have filed for bankruptcy within the last two years and the court allows the lender to continue the previous case. This is done to prevent people from filing for bankruptcy only to prevent foreclosures. However, the court will likely revoke the term of stay if confiscation is eventual. If looking after your home is a priority, Chapter 13 bankruptcy may be a better choice.
Time of stay does not apply
Certain types of billing actions against you are not prohibited by automatic suspension:
– Tax processing, such as an IRS tax audit or a claim for payment.
– Most of the divorce and child support proceedings.
– Pension loans.
– You had a previous pending bankruptcy case within a year before filing. In this case, the automatic stay is only valid for 30 days in this case.
– You’ve missed the deadline for dealing with secured debt (where some of your property is collateral if you don’t pay).
– Eviction, if the landlord has an indictment against you before you file for Chapter 7 bankruptcy or the landlord claims you have endangered property or used a controlled substance on the property. If not, an automatic stay applies but the landlord will likely win a motion to revoke it and evict you.