One of the greatest benefits of filing for bankruptcy is the automatic stay, which immediately goes into effect once you have filed for bankruptcy.
The automatic stay brings an immediate halt to any collection actions being directed against you by a creditor, collection agency, or government agency.
Creditors will in most cases be forced to immediately halt any legal or other actions against you regarding your debt.
This means an end to harassing telephone calls from creditors demanding payment.
If you are facing eviction, your landlord will not be able to proceed with the eviction unless the court agrees to lift the stay to allow him to proceed. If you are in danger of having your utilities cut off, such as electricity, water, or telephone service for non-payment, the automatic stay will prevent a cut-off for at least 20 days.
The purpose of the automatic stay is to give the debtor a brief respite from their creditors, during which they can be making plans to pay their immediate obligations, such as utilities, going forward.
However, there are a narrow number of exceptions to the automatic stay.
Exceptions include court-ordered child support or alimony and repayment of loans from pension programs. The IRS is also allowed to continue a number of actions, including collecting back taxes, while the automatic stay is in place.
In addition, a creditor may ask the court to lift the stay for debt on a secured loan, such as a mortgaged home. In such cases, the court will often lift the stay and allow the foreclosure to proceed. The automatic stay may buy you some time, but it will not stop or even stall a property foreclosure indefinitely.
Contact us for more information on how bankruptcy can help you get a fresh start.