This provision is a """"automatic hold"""" that halts all legal proceedings against you. This includes actions to foreclose, obtain a judgment against you, evict you, and harass you into paying your debt. It can prevent the disconnection of your utilities and protect your unemployment benefits and even your job.
Here are several practical advantages of the autonomous stay:
It ceases As soon as you file your petition, all foreclosure proceedings (actions to force the sale of your home) must cease. The stay is not a permanent solution, but it will give you time to breathe and methodically assess your financial situation to determine if there is a viable way to save your home. If the first mortgage is worth more than the property, you may be able to eliminate your obligation to pay the second and third mortgages. A Chapter 13 bankruptcy plan may also allow you to retain your house. The key aspect of the stay is that it promptly halts any foreclosure proceedings and gives you and your attorney time to determine whether you can manage the property.
It halts collection actions: If you hate to check your mail because another overdue payment option is in the mail or if you hate to answer the phone when a collection agency calls, you should know that the automated stay will halt these actions. All debt collection efforts must discontinue immediately. Creditors must register their claims with the bankruptcy court and then collaborate with the trustee and the bankruptcy attorney for the debtor. In many instances, unsecured debt will be completely discharged (in Chapter 7 bankruptcy) or substantially reduced (in Chapter 13 bankruptcy).
It may temporarily halt eviction proceedings, but the new bankruptcy law makes it simpler for your landlord to evict you despite your bankruptcy filing. This is especially true if the proprietor already has a possession judgment or if you are using controlled substances or causing property damage. Nevertheless, the automatic stay can assist in some cases to temporarily halt the eviction until the landlord can obtain relief from the stay. However, this brief time may be all you need to catch up, so the stay can be of great assistance to some renters.
The automatic delay can prevent the disconnection of utilities such as water, gas, electricity, and telephone service for approximately twenty days. Some debtors may benefit from the brief 20-day grace period, particularly in the dead of winter.
It can aid in preventing wage garnishments. The automatic stay prevents wage garnishment, allowing you to receive your entire paycheck. If the underlying debt is not secured, then it is possible for the debt to be completely discharged and garnishment to cease permanently. If the debt is secured, the creditor is likely attempting to repossess your collateral (such as your residence or vehicle) rather than garnishing your wages. The automatic stay is particularly helpful if multiple creditors are attempting to garnish your wages.
How the Creditors Will Bypass the Stay
In certain instances, the automatic suspension may be lifted by court order. If the debt is secured by real estate or a vehicle, the creditor will typically attempt to lift the stay. If the creditor has a valid security interest and the debt is delinquent, the creditor will typically request that the stay be lifted if the debtor has filed for Chapter 7 bankruptcy. The debtor may counter that the property is protected by federal or state exemptions or reaffirm the debt. In a chapter 13 bankruptcy, the creditor with a security interest will typically await the trustee's evaluation of the chapter 13 plan.
Additionally, the creditor may assert that the automatic stay does not apply in many instances. The stay does not prevent the police from filing criminal charges against a debtor. It does not prevent tax audits or efforts to ascertain tax liability. The stay does not prohibit the debtor from making alimony or child support payments. Your obligation to repay a pension loan may persist.
The stay provides temporary and immediate relief to the majority of debtors. Consult with a local bankruptcy attorney to evaluate your entire financial situation and obtain immediate assistance in stopping collection and other creditor actions.""
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