The “automatic stay” is a powerful tool that becomes effective once you file for bankruptcy protection.
What exactly is this and how will it help as you work toward a better financial future? Here are five ways the automatic stay goes to bat for you.
1. Wage garnishments
The automatic stay will halt all wage garnishment activity until the stay is lifted. Once the automatic stay goes into effect, you will be able to take home your entire paycheck.
2. Utilities
If you are behind on paying your utility bill, the company may threaten to disconnect your electricity, gas, phone or water service. The automatic stay can prevent this from happening for at least 20 days, giving you a level of comfort and some leeway regarding negotiation.
3. Foreclosure
If you are behind on mortgage payments and your financial institution is threatening foreclosure, rely on the automatic stay to stop these proceedings. Keep in mind that if one of your primary objectives is to keep your home, you should consider filing Chapter 13 rather than Chapter 7.
4. Eviction
The automatic stay can put eviction on hold unless your landlord has already secured a wrongful possession judgment against you. Depending on the circumstances, the stay could buy you a few days or a few weeks in which to work out your next step.
5. Public benefits
If a government agency overpaid any benefits to you prior to your bankruptcy filing, the automatic stay will prevent the agency from collecting until the stay is lifted. The agency can only collect if your bankruptcy process makes you ineligible to receive these benefits.
5. More options
There are several ways the automatic stay can help you during the bankruptcy process. Your attorney can provide further information and assistance concerning this important tool.