When you are burdened with debt and the creditors keep harassing you and asking for their money back, you might have no option but to file for bankruptcy. When you take this action, an automatic stay is ordered by the court. This stops civil lawsuits that are filed against you as well as specific collection actions that are being taken against your property by a government entity, collection agency, or a creditor.
How the Automatic Stay Helps
Here’s how automatic stay can offer some protection to you:
· Stops Utility Disconnections
You might be behind on a utility bill, and the company’s representatives might be threatening to disconnect your telephone, gas, electric, or water service. The automatic stay can prevent this disconnection by the company for a period of at least twenty days.
· Stops Foreclosure
If your house is being foreclosed on, then the automatic stay can stop the proceedings. However, what happens next will depend on the type of bankruptcy you file. If you file for Chapter 13 bankruptcy, you would be able to keep your home and catch up payments in a repayment plan. However, if you go for Chapter 7 bankruptcy, the relief provided by the automatic stay will be temporary, and you might have to give up your home soon.
· Stops Evictions
The automatic stay might provide some temporary relief from eviction. However, if your landlord already holds a judgment of possessions against you at the time you file for bankruptcy, the eviction proceedings will not be affected by the automatic stay. The landlord will continue, and if they allege that you have been endangering their property, the automatic stay won’t be able to help you in any way.
· Stops Wage Garnishments
Filing for Chapter 7 bankruptcy stops most wage garnishments. You get a full salary, and you’ll also be able to discharge qualifying debts like personal loans and credit card balances. It is worth noting that commonly garnished debts like alimony and child support won’t be discharged.
What the Automatic Stay Doesn’t Prevent
· Loans from Your Pension
Despite the presence of automatic stay, money may be withheld from your income for repaying a loan from different types of pensions, such as IRAs and job-related pensions.
· Criminal Proceedings
An automatic stay won’t stop criminal proceedings. For instance, if you are sentenced to community service, you will be obligated to do community service, and the automatic stay won’t be able to stop it.
· Support Actions
An automatic stay doesn’t stop a lawsuit against you to establish, collect, or modify alimony or child support or to establish paternity.
If you are being harassed by collectors for payment, filing for bankruptcy might be the right thing to do. However, before you take this step, consider seeking advice from an attorney.