How to Halt Your Creditors Through Bankruptcy: The Automatic Stay

Many individuals considering filing for bankruptcy are inundated by intimidating creditor phone calls and letters, struggling to keep up with monthly bills, and facing the imminent foreclosure of their home. Filing for bankruptcy has the tremendous benefit of immediately halting any attempts at collection, garnishment, judgments, or foreclosure. This is known as the automatic stay provision, and an automatic stay issues the moment a Chapter 7 or Chapter 13 petition is filed in court. The automatic stay is a powerful bankruptcy tool that can assist individuals facing the following emergencies:

creditors-bankruptcy

  1. Foreclosure:  If your home is in the process of being foreclosed on, the automatic stay which will issue upon the filing of a bankruptcy action will prevent any further steps being taken on the foreclosure, at least in the short term. If you file for a Chapter 13 bankruptcy, you may be able to permanently halt the foreclosure by including repayment of your mortgage arrears into your repayment plan. If you elect to pursue a Chapter 7 action, you might still face foreclosure, but you will have options and the automatic stay provision will provide you with the time you need to explore these options.
  2. Eviction:  If your landlord is seeking an eviction due to unpaid rent, the automatic stay provision that accompanies any bankruptcy action could buy you some time, though new bankruptcy laws have diminished its usefulness in eviction matters.  Once the automatic stay issues, your landlord will have to request the court lift the stay in order to continue with the eviction.  The landlord can allege several grounds to lift the stay, including fear of endangerment of the property or use of controlled substances by the tenants. The stay is often lifted, but it still allows bankruptcy filers a matter of days or weeks to find another housing option.
  3. Wage Garnishments:  Bankruptcy filers generally rely heavily on their paychecks to meet bill and basic living requirements. Wage garnishments can cost them greatly.  Filing for bankruptcy will stop all garnishments and halt any creditor seeking to obtain one. This can be of great assistance to individuals struggling to pay their bills due to debts.
  4. Utility Disconnections:  The automatic stay that issues when you file for bankruptcy will also prevent the utility company from disconnecting your electric, water, gas, and telephone service for at least 20 days. This can mean a lot to families filing for bankruptcy in the middle of the cold winter or hot summer.

These are just some of the benefits of the automatic stay provision.  A licensed bankruptcy attorney will more thoroughly explain this important bankruptcy software to you.

Filing for bankruptcy can come right at the time when you need it most.  Families who are struggling to pay their bills and keep up with the mortgage can find refuge through the automatic stay provision that accompanies any Chapter 7 or Chapter 13 filing.  While the automatic stay will not halt collection efforts permanently, it will stop all efforts while you establish your bankruptcy action.  All harassing phone calls and letters will stop and the fear of foreclosure will be lifted as soon as you file your bankruptcy action.

 

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