One of the primary benefits of filing for bankruptcy is the automatic stay. This will stop creditors from contacting you, while also putting lawsuits and many other actions to rest for the time being.
If you are faced with foreclosure, for example, the automatic stay can step in and buy you enough time to figure out how to best move forward.
There are many things the automatic stay can prevent, including the following:
1. Foreclosure. Is your home being foreclosed on? If so, the automatic stay will stop this for the time being or permanently, depending on which Chapter of bankruptcy that you are filing.
2. Eviction. In the event that you are being threatened with being evicted, the automatic stay may be of some assistance. If a judgment has not been entered against you in Pennsylvania, the eviction process is stopped until the Landlord is able to obtain permission from the Bankruptcy Court to resume proceedings against you in the State Courts. Even if a judgment has been entered, you should immediately consult with a bankruptcy attorney who can explain the process to you in your situation.
3. Utility disconnections. If you have fallen behind on utility bill payments, such as to the electric or gas company, the automatic stay pauses the disconnection and typically gets the bill reset to zero.
4. Wage garnishments. Did you know that filing for bankruptcy can stop wage garnishments, thus allowing you to take home your full salary once again? For those who are losing a lot of money through a garnishment, filing for bankruptcy and taking advantage of the automatic stay is an idea to consider.
This includes I.R.S. Tax garnishments against your salary and also includes Student Loan garnishments on your income.
5. Loss of a Drivers License to the non-payment of an automobile accident judgment. In the event of a judgment against you such as when there was no insurance, the filing of the bankruptcy should prevent your drivers license from being suspended or it should allow your drivers license to be reinstated if it has already been suspended.
Should I File for Bankruptcy?
Once you file, the automatic stay will go into place. But does this mean you should jump the gun, filing before you truly know what you are doing?
Despite the benefits of the automatic stay, this is not always enough of a reason to file. For instance, a delinquent gas bill may not be reason enough to consider bankruptcy. Conversely, if you are faced with the prospect of losing your home to foreclosure, your situation is much more serious.
A bankruptcy automatic stay can prevent problems from piling up. If you are thinking about filing, consult with an attorney who can explain how this will impact your financial situation.