These days, many people feel overwhelmed when they look at their finances. COVID-19 has left many people struggling to stay afloat. Others may see a future where a real financial crisis develops in their lives. They may be considering filing for bankruptcy.
One of the benefits of filing for bankruptcy right away is something called the Automatic Stay. In this article, we take a look at how the automatic stay can solve some of your immediate problems.
What is an Automatic Stay?
After you’ve made your decision that bankruptcy will bring the relief you need, and your creditors are notified, their collection efforts must stop. They can’t call you and bother you; they can’t mail you threatening letters, evict you, start legal action against you, garnish your wages, cut off your electricity, or seize your bank account.
Can an Automatic Stay Save Your Mortgage?
One thing you must be aware of… Your mortgage company can petition the court to lift the automatic stay to start the foreclosure process. This action does not happen right away and can allow you some time to negotiate with your mortgage holder.
In a Chapter 7 bankruptcy, you will most likely be allowed to bring the payments current, or to work out other arrangements. In a Chapter 13 bankruptcy, you will be able to catch up all of you mortgage payment arrears and save your home.
How Does an Automatic Stay Help With Eviction?
The automatic stay means a temporary freeze on the eviction process. This will only last until your landlord files and gets a judgment for eviction. You need to know that your bankruptcy filing and the automatic stay will only slow the eviction process and won’t eliminate it.
Can the Automatic Stay Help Me Keep My Vehicle?
Like the temporary delay on foreclosure, the automatic stay will delay the repossession on your vehicle, but it will not stop it. In a Chapter 7 bankruptcy, you’ll need to bring your loan current ASAP. A Chapter 13 filing means you will be allowed to keep your vehicle and pay for it inside your case.
The Automatic Stay and Wage Garnishment
If you have wage garnishment orders in place, and your employer is withholding money from your paycheck, the automatic stay will stop this once you file for bankruptcy.
How Does the Automatic Stay Affect Lawsuits Against You for Debts?
If your creditors have started lawsuits against you in an attempt to collect your debts, they will be stopped when you file for bankruptcy and reap the effects of the automatic stay.
How Do I Get the Automatic Stay?
You need to know that the automatic stay is only part of the bankruptcy process. If you’re considering filing for bankruptcy and would like more information, the first thing you should do is sit down with a bankruptcy attorney. Together you will go over all the paperwork. Your attorney will be able to determine your best course of action after evaluating your position.
Is it Always Best to File for Bankruptcy?
No two cases are alike, and there are pros and cons to filing for bankruptcy. It’s better to go into the process knowing what those are. Legal advice can help you to decide if bankruptcy looks like a good option, which type of bankruptcy you should file, and when is the best time for you to file.