What Is the Automatic Stay in Bankruptcy
For many individuals filing bankruptcy, the automatic stay is one of its biggest appeals. Of course, it’s important to clearly understand what the automatic stay is, how it works, and depending on your specific circumstances, how it may be able to help you. Learn all about the automatic stay in this guide.
The automatic stay is a bankruptcy mechanism which kicks in as soon as you file bankruptcy. Therefore, you don’t have to wait for your case to be completed, the impact of the stay begins immediately. This is why it’s such a great benefit of deciding to file bankruptcy and then taking action.
With the automatic bankruptcy stay, lawsuits against you and other actions being taken by certain creditors are ceased or halted. This provides you with immediate relief in several key areas.
One of the huge upsides of this, for instance, is in temporarily stopping the foreclosure process. Therefore, when you file bankruptcy, the automatic stay kicks in, and your house cannot be foreclosed upon. The foreclosure process may be renewed later, and all of this will depend on your financial situation, and whether or not you are trying to save the home through bankruptcy in addition to getting that temporary pause.
Another one of the most frequently cited benefits of the automatic bankruptcy stay is that it immediately stops wage garnishments. As soon as you file bankruptcy, garnishments can no longer be taken from your income.
Now, you immediately go back to receiving your full paycheck, and this provides crucial relief in terms of being able to meet other debts and financial obligations. Additionally, bankruptcy may be able to help you recoup wage garnishments already taken for a designated period of time before you actually filed.
The automatic stay has numerous other impacts depending on the situation you’re in. If you are being threatened with eviction, or threatened with having your utilities turned off, the automatic stay also applies. Needless to say though, it’s not an instant fix for everything, and does not get applied to every single type of debt or obligation.
There are many considerations when you are thinking about filing bankruptcy. Certainly, the automatic stay is one of them, and it makes a strong case for why you may want to file. Be sure to consult with an experienced bankruptcy attorney who can help you determine the right path for you to take, as no two cases are the same.