Declaring Bankruptcy is not an easy decision, but bankruptcy is not an inherently bad or wrong thing like it is commonly believed to be. Bankruptcy was designed as a way to help consumers eliminate overwhelming debts and get a fresh start and it has many benefits, one of which is the automatic stay.

Stop Those Harassing Creditors

Anyone who is considering bankruptcy is likely experiencing some form of creditor harassment – threatening letters, incessant phone calls, etc. Filing for bankruptcy automatically places an immediate injunction against most collections procedures, meaning that your creditors must stop sending letters and calling you every day. This is the “automatic stay.”

What Actions Are Stayed by an Automatic Stay?

• Collections – Including calls, letters, etc.
• Foreclosures – All actions to repossess a home must cease.
• Lawsuits – Any lawsuits against the debtor, debt-related or otherwise.
• Liens – Including the creation, completion, or enforcement of a lien.
• Repossessions – All actions to repossess a vehicle must cease.
• Wage Garnishments – Your employer will no longer be able to garnish your wages and financial accounts.
• Eviction ­– You will be protected from eviction, but only if your landlord has not received a judgment before you declared bankruptcy.
• Utility Disconnection – Your utilities will remain connected for up to 20 days, depending on your jurisdiction.
• Delinquent Tax Collections – While tax collections are stayed, the IRS can still conduct an audit.
• Overpayment of Public Benefits – The automatic stay will stop collection of overpayment of benefits, but does not act as protection from ineligibility.

Exceptions to the Automatic Stay

There are some cases where a creditor may be able to petition the court to lift the automatic stay. The creditor must be able to prove to the court that stay does not give “adequate protection” to the creditor, or that it jeopardizes the creditor’s interest in certain property. The stay will be lifted if a creditor is able to convince the court that either of these circumstances applies.

Consult a Houston Bankruptcy Attorney – (409) 234-1490

Maida Law Firm, P.C. is here to answer any questions you may have about the bankruptcy process and whether or not it’s right for you. There is more than one option for debt relief and we’ll help you take the best possible course of action to get the fresh start you need.

Sources:

Wikipedia – “Automatic Stay”
The Free Dictionary, Financial Dictionary – “Automatic Stay”
Investopedia – “Automatic Stay”
USLegal – “Automatic Stay Law and Legal Definition”
Legal Dictionary – “Automatic Stay”