The Automatic Stay of Proceedings is One of The Most Powerful Tools in Bankruptcy
Despite the strict rules and regulations which govern the way that loans are given out, it’s difficult for creditors to ensure that they offer the right level of credit to their customers.
Circumstances change, plans don’t always work out, and many people simply overspend, making it hard to pay what they owe.
Of course, though, the banks and other financial organizations that you’ve borrowed from won’t accept any excuses.
Instead, companies like this will often harass those who owe them money with threatening letters and phone calls, demanding payment with the looming promise of lawsuits.
Filing for bankruptcy can be a good way to overcome this when you’re struggling to pay your debt, with an automatic stay of proceedings protecting you from the torment delivered by your creditors.
But how exactly does it work?
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The Bankruptcy & Insolvency Act
The automatic stay of proceedings is an element of The Bankruptcy & Insolvency Act in Canada.
This act covers a range of different areas, from the amount of money you have to pay back when you file for bankruptcy, to the assets which you are allowed to keep as you go through this process.
The stay of proceedings might be automatic, but you still have to make your trustee aware of harassment or court dates so that they can ensure that they are stopped.
This also means that you no longer have to make certain payments to creditors, with the money coming from the bankruptcy arrangement you work out instead.
What Will A Stay Of Proceedings Do For You?
Filing for bankruptcy protects you from legal action at any stage, whether it is merely being threatened or you’re already going through court proceedings.
This means that you will be covered against the following:
- Threat of legal action will be stopped, though some financial organizations will still contact you to threaten it;
- If documents are filed with a court, these will be held, and you won’t have to go through the proceedings;
- Any legal action which has been started in relation to the money you owe will be stopped;
- Court orders from past lawsuits won’t be enforced, as your debt will be covered through your bankruptcy arrangements.
As you can see, a stay of proceedings is an incredibly powerful tool.
While you will still have to pay the money you owe, you will have far less pressure to make unrealistic payments which will make it hard for you to survive.
What Won’t A Stay Of Proceedings Do For You?
While a stay of proceedings will help you when you’re facing a range of legal issues, there are certain types of debt which aren’t covered by this protection.
You will still have to pay alimony, child support, student loans, and secured loans when you file for bankruptcy.
This will be on top of the money you are already paying as part of your bankruptcy arrangement, though you may be able to request that changes are made to your agreement if the payments are simply unmanageable.
Creditors will be given the opportunity to request that your stay of proceedings is lifted, but this is extremely rare.
If this happens to you, you will be given the opportunity to argue against it, and this is often successful.
This occurs in less than 0.1% of bankruptcy filings, making it very unlikely that it will happen to you.
It’s worth taking the time to consider the impact these restrictions could have on you if you’ve decided to file for bankruptcy.
If you’re worried that you won’t be able to pay for this on top of your bankruptcy fees and costs, you could look into an alternative like a consumer proposal.
This gives you the opportunity to negotiate with your creditors, maximizing the time you have to pay your loan, while avoiding the process of bankruptcy altogether.
Initiate Your Automatic Stay With Bankruptcy Canada
Bankruptcy Canada has worked with countless clients to offer debt relief and support with their bankruptcy filing.
Our dedicated team can explore all of your options, offering honest advice to give you the best chance of getting your finances back on track.
This can include going through bankruptcy to initiate a stay of proceedings, drafting a consumer proposal to help you to avoid this process, or simply offering an insight into the choices you have.
We encourage anyone who is considering bankruptcy in Canada to get in contact with our friendly team.
You can call us at 1-877-879-4770 or send an email to Gordon@BankruptcyCanada.com, and we’ll do the rest.
With more than 20 years of experience working with debt, we’re your best choice when it comes to filing for bankruptcy.
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