It can happen very quickly. One day you are financially responsible and taking care of all your bills and then an unforeseen medical emergency changes everything. By the time you experience an ambulance ride, hospital stay, operation and recovery, you could be in substantial medical debt from what your health insurance did not cover.
The most powerful aspect of declaring bankruptcy is the automatic stay. So, what is it and how does it work? At the moment your bankruptcy case is filed with the court, the automatic stay goes into place. It prevents creditors from calling, lawsuits from being filed against your name, and if you have a pending foreclosure sale in the works, the sale must be cancelled.
If credit collectors, attorneys or buyers are knocking at your door, you probably have a debt to answer for. But, between the different terminology you may hear, it can become confusing to know how much you owe and whether you're still in debt.