When you’re struggling with debt, creditor harassment can only make things worse. Fortunately, when you file for bankruptcy protection, a provision called the “automatic stay” kicks in. The automatic stay effectively ends any actions taken against you by creditors and bill collectors. Here are four ways the automatic stay can benefit you.
1. Keeping the lights on
You shouldn’t have to worry about your utility company shutting off your electricity, water, or gas. However, if you fall behind on your payments, power companies can take this drastic action. The automatic stay will stop utility companies from taking any action against you. You should keep in mind that the automatic stay is temporary. That said, it may provide you with enough time to come up with a plan.
2. Stopping foreclosure proceedings
If your lender has begun or is threatening foreclosure proceedings, the automatic stay will temporarily halt these actions. This might provide you with enough time to catch up on your payments or to work out a loan modification with your lender. However, absent an agreement, your mortgage holder will most likely continue with the foreclosure process once the stay expires.
3. Halting evictions
If you are a renter, the automatic stay may forestall an eviction action. However, if your landlord has won a wrongful possession judgment against you, your landlord may go ahead with the eviction. Again, the automatic stay provides temporary relief. However, it may be enough time for you to reach an agreement with your landlord or for you to find a new place to live.
4. Receiving your full wages
Creditors often use wage garnishment to collect their money. The automatic stay will stop all wage garnishment actions. This will enable you to take home your full salary for the length of the automatic stay.
The automatic stay is not a cure-all
Creditors can and do get around the automatic stay by requesting that courts lift the injunction. Even if the court refuses these requests, the automatic stay is only temporary. However, it can provide you with