Automatic Stay during Bankruptcy

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Benefits of Automatic Stay during Bankruptcy

Many people do not realize when they have incurred heavy debts thereby leaving bankruptcy as the last resort. However, not many people are aware that bankruptcy offers a lot of protection to debtors. One of the most important tools of bankruptcy is the automatic stay, which helps stop all actions taken by collection agencies to collect dues from you. In case you are facing eviction issues, foreclosure or repossession problems, due to losing utility or benefits, or are unable to make child support problems; automatic stay comes to the aid of you and your family, in this time of financial mess.

Los Angeles based law firm Recovery Law Group lists the few ways how automatic stay can come to your assistance when you file for bankruptcy:

  1. In case, you are about to get your utilities like electricity, water, and gas disconnected due to non-payment of dues, the automatic stay can postpone the process of disconnection for a minimum of 20 days, giving you a respite as well as time to make repayments.
  2. The automatic stay postpones any proceedings taking place for foreclosure in case the home mortgage is at risk. It is important that people file under Chapter 13 (if possible) in case they wish to keep their house during the bankruptcy process.
  3. Many creditors resort to wage garnishment to clear the dues that you owe them. However, with automatic stay in place, any action of taking a part of your salary by collection agencies is not allowed. However, if court judgment allows, your wages might be taken to repay your creditors.
  4. Any public benefit overpayments that you have received via checks, might be collected by debt collection agencies in normal circumstances. But with automatic stay in place, such collections are prevented, providing you some respite.
  5. For tenants who are about to face eviction due to non-payment of rent, the automatic stay prevents this from happening, thereby providing them respite for some time. However, property owners may find loopholes to work in their favor. The automatic stay can postpone the eviction for some time, but it is important to consult an experienced bankruptcy lawyer to take care of the matter in a proper manner.

Considering the numerous benefits that an individual can get through the automatic stay, it makes sense to file for bankruptcy when the financial problems cannot be taken care of on your own. A skilled bankruptcy lawyer can help you navigate through the various options thereby selecting the best one suiting your particular circumstances.