Choosing to file for bankruptcy is a huge decision and should not be made lightly. When you have had the proper legal counsel and decide that bankruptcy is the best option for you, one of the greatest benefits is an automatic stay. Once you have officially filed for bankruptcy, a court will issue what is called an “automatic stay” which can stop collectors who have filed lawsuits against your and can stop future collection actions that a creditor may take against you. This is one of the most attractive benefits of filing for bankruptcy. If you are considering filing for bankruptcy and would like to learn more information about automatic stays, please reach out to a trusted attorney. They can help you on this path to better finances and help set you up for a more successful future.
What are the benefits of an automatic stay?
When a court issues an automatic stay, there are many benefits. Some of these are:
- Overpayment Collection of Public Benefits
- Utility Disconnection
Foreclosure. One of the biggest fears that many people have when they are behind on their bills and their mortgage payments is having their house foreclosed on. With an automatic stay, however, this can stop the foreclosure process, at least temporarily. When this happens, which type of bankruptcy you have filed for will determine what happens to your home. For example, if you filed for Chapter 7 bankruptcy, you will not likely be able to retain your home when you are behind on payments. With Chapter 13 bankruptcy, on the other hand, you can typically keep your home if you can provide backup payments.
Eviction. It is possible for an automatic stay to help if you are being evicted from your home. It is important to note that this is likely just a temporary. There are certain circumstances where an automatic stay will not change an eviction decision, like if your landlord states that you have been endangering the property in some way. However, you can speak with your attorney to determine if the automatic stay buys you any additional time.
Overpayment Collection. If for any reason the public benefits you receive were overpaid, the agency giving you these benefits is legally entitled to collect whatever that overpayment amount is from either your future checks or from you directly (if you do not receive these benefits anymore). However, an automatic stay can prevent this collection from happening, unless you are no longer eligible to receive these benefits.
Utility Disconnection. Getting behind on your utility payments can be scary, and when the utility company threatens to disconnect your regular services—electric, gas, water—an automatic stay can temporarily prevent this disconnection.
Are there ways around automatic stays?
Yes. It is possible for a creditor to file a motion with a court to lift the automatic stay. When this happens successfully, they can continue collecting from you.
If you are interested in how an automatic stay can help you out, or if you have other general questions about how we can help you file for bankruptcy, please contact an attorney now.