Tired of the harassing phone calls or threatening letters from creditors? Looking for some relief from creditors and a chance to regroup financially? The moment you file for bankruptcy an automatic stay will help you with these situations.
When you file for Chapter 7 or Chapter 13 bankruptcy, something called an automatic stay immediately goes into effect. It is an automatic injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy. If you are at risk of being evicted, being foreclosed on, being found in contempt for failure to pay child support, or losing such basic resources as utility services, welfare, unemployment benefits, or your job (because of wage garnishments), the automatic stay may provide a powerful reason to file for bankruptcy. There are some exceptions to the automatic stay, so it’s important to learn about these before you file.
The automatic stay can prevent:
- Utility disconnections – If you are negligent on a utility bill such as water, electric, gas, or telephone service the automatic stay will prevent the disconnection for at least 20 days.
- Foreclosure -An automatic stay will not stop foreclosure proceedings forever but will temporarily stop the proceedings.
- Eviction – The automatic stay may provide some help — but the new bankruptcy law makes it easier for landlords to proceed with evictions. Discuss your specific situation with an experienced bankruptcy attorney.
- Multiple wage garnishments. Filing for bankruptcy stops garnishments dead in their tracks.
The automatic stay may NOT be able to prevent:
- Child or Spousal support – A lawsuit against you seeking to establish paternity or to establish, modify, or collect child support or alimony isn’t stopped by your filing for bankruptcy.
- Criminal proceedings. A criminal proceeding that can be broken down into criminal and debt components will be divided, and the criminal component won’t be stopped by the automatic stay.
- Pension Loans – Despite the automatic stay, money can be withheld from your income to repay a loan from certain types of pensions.
- Some tax proceedings – The IRS can still audit you, issue a tax deficiency notice, demand a tax return, issue a tax assessment, or demand payment of such an assessment.