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What can bankruptcy’s automatic stay protect you against?

On Behalf of | Jan 15, 2020 | Chapter 13, Chapter 7

Pondering whether filing for bankruptcy may give you your best possible chance at a fresh financial start? You are not alone. Increasingly, Americans are finding themselves inundated with bills, expenses and calls from debt collectors. If you are among those facing these hardships, you may be at your wit’s end. You may, however, find that you are able to get some temporary relief from creditor harassment once you initiate bankruptcy proceedings and begin the process of getting your financial affairs back in order. 

How? Once you formally begin bankruptcy proceedings, something known as the automatic stay comes into play. The automatic stay refers to a period in which some of your creditors must cease their communications with you while you navigate the bankruptcy process. While the automatic stay is not going to absolve you from having to pay all of your debts, it may give you at least short-term relief in some areas. 

Utility companies 

It may be stressful to have utility companies threatening to turn off your services, especially if you have children living in your home. Typically, though, utility companies may not disconnect your services while the automatic stay remains in effect. 

Wage garnishments 

If you are struggling to stay current on your bills, you may be losing some of your wages to garnishment. Once you start bankruptcy proceedings and the automatic stay takes effect, these wage garnishments should cease. 

Evictions and foreclosures 

Although there are some notable exceptions, filing for bankruptcy and implementing the automatic stay period may also help you avoid eviction or foreclosure. If, however, your creditor requests that your court lift the stay and that request proves successful, your creditor may ultimately be able to evict or foreclose against you. 

While bankruptcy’s automatic stay may help you avoid certain expenses for a set period, it does not absolve you of all financial obligations you may face during that timeframe.