What are the automatic stay and exempt assets in bankruptcy?

Filing for bankruptcy isn’t ever an easy decision to make. It is imperative that you have all the information you need to make the decision that is in your best interests. Many things can impact this, so be sure that you get answers to your questions as soon in the process as possible.

There are some basic points that will come into the picture in every bankruptcy case. Understanding these can give you an idea of what to expect.

What is the automatic stay?

The automatic stay prohibits creditors from being able to contact you to try to collect on the debt. This means they can’t send you collection notices, call you or use any other form of communication. It is possible that the creditors might face penalties if they do make attempts to contact you. This should help you feel less stress since you don’t have to worry about demands now.

Are all assets counted?

Some assets are exempt from the bankruptcy process. These aren’t counted when the court is determining your eligibility. Exempt assets are ones that you can keep despite the bankruptcy. These typically include vehicles up to a specific amount, jewelry, the equity in your home and others that are protected from creditors by state law.

You do have rights when you are going through a bankruptcy. It is imperative that you think about what’s going on to try to figure out how to assert these. Just because you are filing for bankruptcy doesn’t mean that your creditors can do whatever they want. They still have to comply with the applicable laws.