Automatic Stay – Way to Stop Your Creditors

  • Foreclosure

Automatic Stay – Way to Stop Your Creditors

One of the best advantages that bankruptcy can offer debtors is an automatic stay. this puts an immediate end to all collection actions and any civil lawsuit filed against you by the creditors, government or collection agencies. The upside of the automatic stay as per Los Angeles based bankruptcy law firm Recovery Law Group  is that it can help you prevent being evicted or protect your property from being repossessed or foreclosed on, utilities being disconnected or wage garnishment. For more information on automatic stay, call 888-297-6023 and speak with bankruptcy lawyers.

What can automatic stay prevent?

The automatic stay can come in handy in several emergencies like:

  • Utility bills. In case you are behind on utilities like water, gas, telephone or electricity and face disconnection, the automatic stay can prevent it for a minimum of 20 days. however, you need to pay a deposit to ensure future payment.
  • Foreclosure. The automatic stay prevents the proceedings of foreclosure. You can catch up on past payments in the Chapter 13 repayment plan if you wish to keep your home. However, if you are behind on your payments in a chapter 7 bankruptcy case, an automatic stay is a temporary relief.
  • If the landlord has a judgment against you, or they allege you are endangering the property then automatic stay cannot help. In other cases, the automatic stay may provide temporary relief, however, the landlord might ask the court to lift the stay and allow eviction.
  • Wage garnishments. the automatic stay puts an end to collection actions like this. You can discharge qualifying debt like credit card or personal loan dues. However, alimony and child support debts cannot be discharged. Priority unsecured debts are dealt with differently in different bankruptcy chapters.
  • Overpayment of public benefits. The agency is entitled to collect any overpayment made from future checks or from you directly. The automatic stay prevents the collection but does not prevent the agency from terminating benefits.

In what circumstances automatic stay is not of much help?

An automatic stay cannot help you in some cases like:

  • Tax proceedings. IRS can audit you, issue tax deficiency notice and tax assessment, demand tax return or payment of assessment despite the automatic stay. However, there can be a temporary pause to issue of tax lien by IRS or seizing your income or property. The taxes could get discharged in Chapter 7 bankruptcy Dallas, or you might end up paying the debt in Chapter 13.
  • No respite from legal actions. A lawsuit for paternity establishment, modification or collection of spousal or child support won’t be stopped. Similarly, any criminal proceeding against you (sentence, paying fine, community service, ) won’t be stopped by the automatic stay.
  • A loan from the pension. Money can still be withheld from your income despite automatic stay to repay loans from some pensions like IRAs and job-related ones.
  • Numerous filings. In case you have a pending bankruptcy case from the previous year, the automatic stay lasts only for 30 days unless the creditor or the trustee asks for its continuation. In case any creditor files for a motion to lift the automatic stay, you will need to prove that the bankruptcy case was filed in good faith and the automatic stay protection should continue.

Can creditors resume collection action?

Creditors can ask the court to lift the automatic stay sanction by filing a motion in bankruptcy court. This is generally done in case of a foreclosure, tenant/landlord dispute or a lawsuit in a different court. If the creditor can show that they will lose money with automatic stay in place and no benefit/harm will come to other creditors, the court might agree.