There are a number of benefits to declaring bankruptcy which are designed to let you reorganize and rebuild yourself financially and slowly get back on the path to financial freedom by eliminating your debt. One of these benefits is an “automatic stay,” which goes into effect as soon as you file for bankruptcy.
What Is an Automatic Stay?
An automatic stay is an injunction which halts all debt collection actions by creditors (with a few rare exceptions). This gives you the opportunity to reorganize your finances and get on the road to debt freedom without having to constantly deal with relentless debt collectors.
What Can an Automatic Stay Prevent?
An automatic stay can prevent a number of negative consequences of debt from occurring, allowing you to keep as much of your life in place as possible while you begin down the path to freedom from your crippling debt.
If you fall behind on your utility bills, such as your gas, electricity, or water, your utility company may threaten to shut off your service. An automatic stay prevents this shutoff for at least 20 days. If you’re filing bankruptcy in the middle of a hot, humid Florida summer, being able to keep your air conditioner running can be a huge help.
If you’re being threatened with foreclosure or your loan company has begun the foreclosure process, an automatic stay will put the process on pause for a little while. It doesn’t get rid of the issue permanently, but this gives you a window of opportunity to catch up on your payments, which would put a permanent stop to the foreclosure process.
If you are being evicted from your apartment or residence, an automatic stay can buy you a little bit of extra time to resolve your issues with your landlord. However, landlords can often find ways of having the stay lifted. At most an automatic stay will buy you a couple of days. However, this could give you the opportunity to smooth things over with your landlord and catch up on rent payments, which may be enough for your landlord to give you another chance.
Some creditors who file legal action against you can place a wage garnishment against you, which automatically intercepts a portion of your paycheck and applies it towards your outstanding debt. Obtaining an automatic stay automatically stops any wage garnishments, which means you receive your full paycheck and gives you the ability to discharge some of your debts. This also gives you the ability to decide how you want to pay off your debts using the entirety of your income.
Collection of Overpayments on Public Benefits
If you receive public benefits and were overpaid, the agency that overpaid your benefits is normally entitled to attempt to collect the overpayment out of your future benefit checks. However, an automatic stay prevents this from happening, meaning you’ll receive all future benefit checks in full. However, you may still be ruled ineligible or become disqualified from future benefits while under an automatic stay.
Retain an Attorney
If you need assistance with the bankruptcy process, it’s important to discuss your options with a Brevard County bankruptcy attorney from the Buchalter Law Group. We offer more than 50 years of combined experience in practicing bankruptcy law, and our team is dedicated to your success. We strive to help each of our clients reach their goals of financial freedom, and we can help you develop an individually tailored plan that will get you back to financial independence while minimizing the hurdles you must overcome to get there. Speak with our attorneys today to discuss your case further.
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