When you file for bankruptcy in Tennessee, you will receive an automatic stay of creditor collection activities. As a general rule, this means that your creditors cannot contact you about a debt, proceed with a lawsuit or foreclose on your home. The stay typically remains in place until the case is closed, which can be several years after you file if you seek Chapter 13 protection.
When does the stay go in place?
The stay will go into place as soon as a bankruptcy court receives your petition. However, it may take a few hours or days before your creditors are made aware of the fact that you are seeking protection from them. Typically, larger creditors have systems in place that notify them of a bankruptcy almost as soon as it happens. However, smaller companies or private lenders may still contact you, and if they aren’t aware that you filed for Chapter 7 or 13 protection, they may not be subject to sanctions for doing so.
The stay may benefit creditors as well
An automatic stay may help creditors because it prevents one party from getting paid while others are stuck with nothing. After a bankruptcy proceeding begins, all creditors in the same class are treated equally. For instance, all secured creditors are generally treated the same even though they generally get paid before unsecured creditors.
Can an automatic stay be lifted?
If you file for consumer bankruptcy multiple times in a single year, you may only receive a stay for 30 days from the date of your most recent filing. In addition, creditors can ask for the stay to be lifted if there is reason to believe that it may hinder them from obtaining payment in a timely manner.
If you are struggling to pay your debts, bankruptcy may be an ideal way to eliminate some or all of your current balances. Even if you can’t eliminate a debt by filing for protection from creditors, an automatic stay may provide you with enough time to get your affairs in order.