When carrying a significant amount of debt, New York consumers may feel like there is no way out. The past-due notices are stressful, as are the phone calls, letters and threats from debt collectors. Depending on the situation, it may be possible for a creditor to actually take action to collect on a past-due balance.

If you are facing this yourself, you know how frustrating it can be to learn that you are facing the possibility of certain actions such as wage garnishment, repossession and foreclosure. Fortunately, there are legal options available to you to fight back. One way to do this is to enact the automatic stay, which happens when a person files for bankruptcy.

What does the automatic stay do?

Filing for bankruptcy can be a smart step for individuals who can no longer manage their financial obligations and make payments. It may not seem like an ideal situation for you, but bankruptcy can actually offer many benefits, including the ability to deal with your debt once and for all.

In addition to giving consumers the ability to seek a better financial future, one of the benefits of filing for bankruptcy is the automatic stay. This goes into effect when a person files for bankruptcy, and it can do the following:

• Keep the utility company from shutting off your power or your water
• Stop the process of foreclosure on your home
• Halt the process of eviction from your place of residence
• Stop the garnishment of your earned wages
• Keep creditors from repossessing your vehicle and other property bought on credit

There are limits to what the automatic stay can do for you. For example, you will still have to pay child support and meet other financial obligations after filing for bankruptcy. However, you will enjoy a reprieve from the harassing phone calls and letters as you meet the terms of your bankruptcy plan.

A better financial future for you

Through bankruptcy, you may be able to achieve a better and more stable financial future. There are two main chapters of consumer bankruptcy, Chapter 7 and Chapter 13, and the automatic stay will go into effect by filing for either one.

An assessment of your case will determine which chapter is the right option for you. This is a serious decision, and it may be helpful to carefully weigh the benefits of this process with any potential drawbacks that could impact your future.