Advantages of "Automatic Stay" After Declaring Bankruptcy

Posted by Survivingyourmortgage on January 21st, 2015

Once you file for bankruptcy, an automatic stay immediately halts lawsuits filed against you, as well as most actions against your properties by your lenders, a collection agency, or a government entity. Used correctly, the automatic stay can be a powerful tool for preventing evictions and foreclosures, as well as other issues. Here are just some of the actions an automatic stay can help prevent:

1. Foreclosure. The automatic stay can temporarily stop foreclosure proceedings, but creditors may be able to proceed sooner or later. Talk to a lawyer to explore ways of using the automatic stay to buy your time so you can figure out your finances.

2. Utility disconnections. Are you behind on your utility bills? Will the company soon disconnect your electric, gas, water, or phone service? An automatic stay can prevent disconnection for 20 days (at least).

3. Eviction. If you are facing eviction, the automatic stay may be able to buy you time. That said, the new bankruptcy law has made it easier for landlords to go ahead with evictions. The automatic stay won’t delay the process if the landlord already has what’s called a ‘judgment of possession’ against you by the time you file for bankruptcy. Talk to a bankruptcy lawyer to find out how to use an automatic stay to buy yourself a few days.

4. Collection of public benefit overpayments. The agency typically collects any overpayment if you receive any form of public benefit and were overpaid. These overpayments are usually deducted from your future checks. An automatic stay can prevent this collection. Note that if you are rendered ineligible for benefits, the agency can still deny or terminate those benefits and the automatic stay won’t prevent them from doing so.

5. Multiple wage garnishments. Perhaps one of the biggest advantages of filing for bankruptcy and applying an automatic stay is that garnishments are stopped right away. This means you will be able to take home a full salary, as well as discharge the debt.

Beware that creditors are able to get around an automatic stay. They ask the bankruptcy court to lift (remove) the stay if they are able to prove that it isn’t serving its intended purpose. This is why it makes sense to hire a lawyer. A good attorney can advise you on whether or not filing a bankruptcy is your best course of action, and help ensure that creditors are not able to lift the automatic stay.

About The Author:
The Law Offices of Justin McMurray, P.A. is dedicated to helping the people of Jacksonville, FL with all of their bankruptcy and foreclosure defense needs. They strive to help each and every resident of Jacksonville understand their options and their rights when it comes to bankruptcy. If you are suffering from difficult financial circumstances and are worried about losing your home or filing for bankruptcy, then call them for a free initial consultation.