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Automatic Stays in Illinois Bankruptcies

Posted on in Bankruptcy

With the recession creating financial difficulties for many families, some Illinois residents decide to file for bankruptcy due to sudden loss of income or the potential for their home to foreclose. If you're bothered d by incessant phone calls and emails from creditors, filing for bankruptcy can be a good option.

Fortunately, federal bankruptcy law contains something called an “automatic stay”. An automatic stay means that once the necessary paperwork is filed in Illinois bankruptcy court, creditors are no longer legally able to contact you about debts (with few exceptions.) If they do, they can be charged with contempt and in some cases can even sue them for harassment. Automatic stays granted in Chapter 7, Chapter 11 or Chapter 13 bankruptcy prevent most creditors from making any more phone calls to you or your place of employment. They can no longer threaten you with repossessions, garnishments and/or lawsuits.

Automatic stays continue as long as the bankruptcy is being processed in court. Once a discharge order is received, the individual filing the bankruptcy case loses this automatic stay protection. However, the majority of debts involved in a Chapter 7 bankruptcy case are eliminated, so clients won't require the automatic stay law to keep creditors from harassing them.

Debts that continue following bankruptcy can include back taxes, child support, student loans and alimony, meaning that creditors will be legally permitted to pursue these debts. Chapter 13 bankruptcies that leave some debts viable will be subject to payment plans following the bankruptcy..

Filing bankruptcy helps financially stressed individuals gain much-needed relief from creditor intimidation in order to reorganize monetary issues. If you're considering filing for bankruptcy in Chicago, contact a skilled Arlington Heights bankruptcy law firm such as Newland & Newland to guide you through this complex process.

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