Will a Bankruptcy immediately provide debt relief?

Yes, the moment a bankruptcy petition is filed, an automatic stay goes into effect. This automatic stay will prevent most creditor actions from either commencing or continuing. It will stop or stay a foreclosure sale from taking place in most instances. It will stop a collection agency from continuing with collection efforts. If a creditor takes action against you after you filed for bankruptcy, that action will be void. If the creditor takes steps against you knowing that you filed for bankruptcy, that creditor will be subject to the sanctions imposed by the bankruptcy court. This automatic stay is embodied in section 362 of the United States Bankruptcy Code. So, what this means is the phone calls must cease, any collection lawsuits are stayed, judgments can not be entered and garnishments must end. However, not all actions are stayed by a bankruptcy filing. It will not affect a criminal prosecution or sentencing. Paternity lawsuits are excepted from the automatic stay as well as governmental proceedings to enforce police or regulatory powers. The Bankruptcy Code allows creditors to seek relief from the automatic stay if the creditor to show certain grounds are met. The creditor must file a motion on notice to the debtor seeking that sought of relief. So, one of the most favorable features of a bankruptcy filing is the automatic stay that is triggered as soon as the petition is filed. It provides the debtor with breathing space that the debtor needs. If the debtor filed a reorganization proceeding, this will provide the debtor with time to propose a plan to pay back the creditors. If it is a chapter 7 liquidation case, the automatic stay provides the debtor with relief from creditor collection efforts and allows the debtor to proceed toward receiving a discharge. If a bankruptcy case is dismissed, the automatic stay will no longer be in effect. If the debtor receives a discharge of debts, the creditors whose debts were discharge are prohibited from proceeding with collection efforts after the bankruptcy case is closed. In sum, the automatic stay is the therapeutic that a person in financial distress needs as it immediately freezes most collection actions and gives the debtor the pause he or she needs.

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