Filing for bankruptcy is never an easy proposition. However, when your debts reach a point where it is not possible for you to meet your financial obligations or to cover your debts, you may need to file for bankruptcy protection. On the surface, most people will look towards the restructuring of debt and potential discharge from certain debts as the most beneficial aspects of filing for bankruptcy. On many levels, it would certainly be accurate to note that such benefits are pronounced and helpful. However, many others may note that one of the very best benefits to filing for bankruptcy protection would be the attainment of an automatic stay.
Such an assessment is frequently accurate. The automatic stay component can be considered the best immediate benefit gained from filing for bankruptcy.
What does an automatic stay refer to? Basically, it is common to define an automatic stay as an injunction. The injunction is completely automated (Hence - an automatic stay) which means once you have filed for bankruptcy, an injunction is put into play as it ceases all collection action from creditors.
In general, this will mostly impact unsecured debt. For those debts that are secured, a creditor will need to petition the bankruptcy court in order to receive an agreement to continue collection. Granted, it will be the court that decides how such collection action is to be undertaken.
The sheer numbers of benefits which can be derived from an automatic stay are almost too many to list. Among the most common and helpful benefits are:
Increased liquidity begins immediately. Why is this so? Basically, you will no longer be required to meet obligations other than what the courts determines equitable to all parties involved. In some instances, a lender could be 'denied' any payments for several months. All of this serves the very helpful purpose of providing much needed liquidity which is another word for cash flow. With greater cash flow, you can then take the needed steps required to effectively develop a workable budget for your current situation in life.
It should also go without saying that there are many helpful psychological components to an automatic stay in bankruptcy. The most obvious of which would be the tremendously reduced stress that will likely derive when your creditors are no longer pressuring you to make payments you do not have the cash available to make. Additionally, you would not be required to seek out a source of additional revenue or to increase further liquidations of assets in order to make such payments. Once the bankruptcy court has issued the injunction stay, you will be freed from the extreme stress situations like this are prone to cause.
There are clearly a number of positive benefits which come from a stay of action and these benefits are both fiscal and even psychological. Because of these benefits, it becomes obvious that such a stay aids greatly in your ability to get your life back in order. And is that not what filing for bankruptcy should entail in the first place?
0 comments:
Post a Comment