Many people contact us to learn more about bankruptcy, in particular the automatic stay. They want to know what this is, how it can help their situation, and whether or not they should move forward with filing.
When you file for bankruptcy, the automatic stay goes into effect to stop any action by a creditor or collection agency. For example, this can stop a lender from foreclosing on your home, as well as any lawsuit against you.
If you are unsure of what an automatic stay can prevent, consider the following:
- Foreclosure. As noted above, the automatic stay will stop foreclosure proceedings for the time being. This may only be temporary if you file for a Chapter 7 Bankruptcy or completely save the property if you file under Chapter 13 Bankruptcy, but it gives you enough time to figure things out.
- Utility disconnections. If you have fallen behind on a utility bill and are being threatened with a disconnection, the automatic stay will prevent this from happening for a minimum of 20 days.
- Eviction. Are you being evicted from a property you rent? If so, the automatic stay may be able to help. This all depends on what your landlord has done so far, so make sure you check with an attorney regarding your rights.
- Collecting overpayment of public benefits. Were you overpaid in public benefits? Even though the agency has the right to collect this from future payments, they cannot do so if an automatic stay is in place.
- Wage garnishment. Once you file for bankruptcy, wage garnishment is no longer a concern. The automatic stay will stop this, meaning you will have access to your full paycheck.
These are just a few of the many things the automatic stay can prevent. With these in mind, would it be in your best interest to file for bankruptcy?
The automatic stay alone is not reason enough to file, but this may be something that pushes you in this direction in the near future.