Queens Bankruptcy Lawyer's Guide to the Power of the Automatic Stay

Posted by Skyseo Roundtable on August 10th, 2023

How Does an Automatic Stay Work?

If you live in New York, and you are being harassed by collection agencies, the automatic stay part of the bankruptcy process may give you room to breathe.

What is an Automatic Stay?

Under Section 362 of the United States Bankruptcy Code - https://www.usbankruptcycode.org/ - as soon as you declare bankruptcy, and your paperwork is submitted to the court, an automatic stay kicks in. This prevents most people and companies from trying collect the money you owe them. Most debtors and bill collectors must immediately stop trying to call, write, or email you. Let’s look at what an automatic stay does and doesn’t cover.

An Automatic Stay Can…

Slow down evictions - an automatic stay can temporarily stop an eviction, giving you a few more weeks to find a new place to live. However, this doesn’t cover all eviction proceedings, which we’ll cover in the next section.

Avoid foreclosures – an automatic stay will immediately stop all foreclosure actions. This will give you a few months to either find alternative housing (Chapter 7 bankruptcy - https://www.ny-bankruptcy.com/services/bankruptcy-solutions/bankruptcy-chapter-7/ )

or work out a plan to reduce and reorganize your debt (Chapter 13 bankruptcy - https://www.ny-bankruptcy.com/services/bankruptcy-solutions/bankruptcy-chapter-13/ ).

Keep your utility services – if you are behind on your utility (landline telephone, gas, electric, water) bills, an automatic stay will prevent your utilities from being shut off for a few extra weeks. Note – cell phones and broadband (internet and TV) are not covered.

Stop certain wage garnishments – if part of your paycheck is being diverted to pay off certain commercial debts (i.e., credit cards), your employer will need to immediately stop the payment.

Temporarily halt car repossession – if your bank is threatening to repossess your car, an automatic stay can give you a few extra weeks to either negotiate with your lender or to find alternate means of transportation.

The Limits of an Automatic Stay

Cannot stop all evictions – an automatic stay won’t apply if:

the eviction proceeding started before you declared bankruptcy

the landlord can prove you are breaking the law or the lease (damaging the property, dangerous behavior, selling drugs from your apartment, etc…)

Cannot stop the IRS – if you are being audited, or the IRS demands taxes owed.

Cannot stop family court charges – child and spousal support aren’t covered. If your wages are garnished to pay these costs, they will continue to be.

An automatic stay may also not be allowed if you’ve declared bankruptcy multiple times in a year.

Why You Need a Bankruptcy Attorney by Your Side

While an automatic stay can sound like the answer to prayer when it comes to being hassled by debt collectors, be aware that your creditors can fight back. They can ask the court to order modifying or lifting the automatic stay, giving them the ability to once again demand repayment. If the court feels that you are committing fraud or you are not paying your bills when you could, the automatic stay could be revoked. In any case, there are usually a number of hearings involved and you don’t want to go through this all alone.

 Reaching Out for Help

If you live in New York, and you’d like to talk directly to someone who specializes in creative, case-specific, out of the box, legal solutions to help guide you effectively through the bankruptcy process, reach out to New York bankruptcy lawyer Ronald D. Weiss, P.C. for a free consultation. He can walk you through the process of getting the help you need. Call 631-271-3737 and take the first step to a fresh start.