When you are drowning in debt, you may think of bankruptcy as your only hope. Many people discount bankruptcy, but it does have its advantages. One of these benefits is something called an automatic stay, which is a fundamental protection for debtors.
What is the Automatic Stay?
An automatic stay typically happens immediately after a bankruptcy case is filed. It is imposed against creditors and collection agencies and makes it so they must immediately stop all collection activities. This means they cannot contact you to repay a debt. They cannot harass you at all. Creditors and collection agencies may no longer contact you by phone or correspondence. They cannot file a lawsuit to collect the debt nor can they garnish your wages or file a lien against a bank account or other asset in an effort to take money from you to pay off a debt.
How long does the automatic stay last?
The automatic stay typically lasts for as long as the bankruptcy case lasts, so it could be several months or several years. For many debtors, the automatic stay provides significant relief. It reduces anxiety and allows a bankruptcy filer to regroup and plan for their financial future and the fresh start that will be available once debts are discharged in the bankruptcy.
How does it help me?
An automatic stay can help a debtor in many ways. It prevents utility disconnection for 20 days and stops most wage garnishments. The automatic stay also temporarily stops foreclosure proceedings and eviction. However, if you rent a home and the landlord claims that you have endangered the property or used controlled substances, they can get the automatic stay lifted.
Are there exceptions to the automatic stay?
An automatic stay cannot help you with everything. It cannot prevent criminal proceedings. If you were charged with a crime and there is a penalty involved, an automatic stay will not help you avoid paying it. An automatic stay also cannot stop child support actions. In fact, child support debt is among the first debts to get paid.
It is important to understand that the automatic stay does not always apply in a bankruptcy case. There may only be an automatic stay if the debtor obtains a court order that imposes it. In some situations, there may be no automatic stay at all. There are different timeframes and deadlines to consider as well. Also, some creditors (such as child support services) may take action to collect from a debtor, regardless of whether or not there is an automatic stay in place. This is a situation where your lawyer can help you to learn more about any restrictions and timelines that may apply in your case.
Contact Us Today
Bankruptcy can help you deal with creditors, but it is a major action that comes with consequences. Bankruptcy should only be done as a last resort. The Law Offices of Adam M. Freiman can give you more information about how an automatic stay works and if it can help you in your specific situation. Call (410) 486-3500 or fill out the online form to schedule a consultation.