Living your life while buried in an absurd amount of debt is not easy, and many turn to bankruptcy as a means of escaping the heavy chains of debt. Both Chapter 7 and Chapter 13 bankruptcy are legal processes that offer legal protections against financial hardship. The purpose of bankruptcy is to help consumers overburdened by debt as they get back on their feet and resume living a healthy, financially stable life. One of the essential protections and obvious benefits of bankruptcy is the automatic stay.
What is the Automatic Stay that Goes Into Effect During Bankruptcy?
If you’re wondering exactly what an automatic stay is, you aren’t alone. Legally speaking, it is an injunction that goes into effect as soon as a bankruptcy petition is filed. The automatic stay injunction prevents a bankruptcy petitioner’s creditors from moving forward with any debt collections or debt collection related proceedings once the bankruptcy is filed. According to bankruptcy code, the automatic stay is in effect as soon as the bankruptcy petition is filed.
1st Benefit of Bankruptcy’s Automatic Stay: No More Collections
Bankruptcy’s automatic stay puts an immediate stop to all collections and collections processes; any action a creditor might otherwise take to attempt to recoup the money they are owed. Once the automatic stay of bankruptcy is in place, collection activities are prohibited by the bankruptcy court. For instance, collectors are not allowed to call you to ask for payment or file for wage garnishment. Since the automatic stay goes into effect as soon as the bankruptcy petition is filed, delaying filing is typically not beneficial.
2nd Benefit of Bankruptcy’s Automatic Stay: Protection from Certain Financial Repercussions of Debt
The automatic stay doesn’t protect you from everything, but it offers some essential protections that are much appreciated by many bankruptcy petitioners. For instance, when the automatic stay goes into effect, utility disconnections like water, electric, or gas may be blocked for up to 20 days. The automatic stay stops wage garnishments. And collections for overpayment of public benefits may be stopped temporarily. It is important to note that there are exceptions to the protections offered by the automatic stay like judgments for past-due child support or IRS debt proceedings.
3rd Benefit of Bankruptcy’s Automatic Stay: Protect the Filer Against Losing their Home
The automatic stay can temporarily halt the foreclosure process. Additionally, landlords may not be able to evict you (unless the eviction process is already in process on the date of the bankruptcy filing).
How to Make the Automatic Stay Work for You:
If you filed bankruptcy and creditors continue to pursue you even though they are prohibited from doing so by the automatic stay, contact an experienced bankruptcy attorney for guidance. It is appropriate to immediately advise any creditor who contacts you after filing your bankruptcy and your case number. Once they have been advised that you have filed bankruptcy, they should immediately cease contact. If they continue, they can be fined.
There is no shame in turning to bankruptcy to seek a discharge of debt when unintended circumstances leave you struggling to provide for your family. Are you out of choices? Do you need help releasing your family from the chains of debt? Don’t hesitate to call Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.