Whether you file for bankruptcy in Ohio or any other state, you will be granted an automatic stay of creditor contact. In most cases, the stay goes into effect as soon as your petition is received by a bankruptcy court. Once it is in effect, creditors cannot make phone calls, send letters or otherwise get in touch with you about an outstanding debt balance.

Many file to obtain peace of mind

It isn’t uncommon for debtors to file for bankruptcy simply to put an end to the endless stream of creditor phone calls or collection letters. However, the stay could also put a temporary end to wage garnishment, prevent creditors from freezing a bank account or prevent a car from being repossessed by local authorities.

Creditors could move to lift the stay

Creditors have the right to ask that a stay be lifted by filing a motion with the court. There are scenarios in which a bankruptcy court will grant the motion to lift some or all of the stay. For instance, if you have negative equity in a home, a judge will likely allow a creditor to proceed with a foreclosure. A stay could also be lifted if you are going through a divorce at the same time that your bankruptcy petition was filed. The stay could allow the marriage to end without any determination as to how assets are to be split.

Penalties might be levied if the stay is violated

Generally speaking, creditors go to great lengths to make sure that they don’t violate your rights in a bankruptcy proceeding. However, if you can prove that a creditor willfully and maliciously violated a stay, you could be entitled to compensation. That creditor might also be required to pay legal fees incurred to hold it accountable for its actions.

Hiring a legal professional familiar with state and federal bankruptcy law may make it easier to pursue debt relief without undermining your rights. An attorney may be able to further explain the automatic stay and how it applies to your case.

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