Let Our Bankruptcy Attorneys Serving Los Angeles Protect You
Living your life under a looming cloud of debt you cannot repay is never easy, but filing for bankruptcy can be your saving grace. Whether it is chapter 7 or chapter 13 bankruptcy, these legal processes are designed for people who have hit a financial hardship so they can get back to living some kind of normal life. An automatic stay is part of the bankruptcy filing process, and some may even say it is one of the most important components.
What Exactly Is an Automatic Stay?
An automatic stay is an injunction that prevents creditors from moving forward with debt collections proceedings once a debtor has declared bankruptcy. By bankruptcy code, the automatic stay goes into effect as soon as the petition to file bankruptcy has been filed.
How Does the Automatic Stay Protect You?
The automatic stay essentially puts a stop to collection processes that creditors would otherwise use to recoup the money they are owed. This means that once the automatic stay is in place, certain activities on their part are restricted by the bankruptcy court, such as calling you to collect debts or starting the process of garnishing your wages. Because the automatic stay goes into effect as soon as the bankruptcy petition is filed, it can be a great idea to go ahead and talk to a bankruptcy lawyer and file as soon as you know you are going to do so.
What Does an Automatic Stay Protect?
While an automatic stay will not protect you from everything, it will protect you temporarily from most kinds repercussions related to debt. When the stay goes into effect:
- Utility disconnections, such as your water, gas, or electric, can be prevented for as long as 20 days
- Foreclosure processes may be temporarily halted
- Your landlord may not be able to evict you if they hadn’t already started the eviction process when you filed
- Wage garnishments will come to an end
- Collections for overpayment of public benefits may stop temporarily
Furthermore, during an automatic stay, the creditor is not allowed to contact you via phone, email, or any other means in an effort to collect a debt. There are certain things that the automatic stay cannot always prevent, such as judgments against you for child support or IRS proceedings.
What Should You Be On the Lookout for During an Automatic Stay?
If a creditor continues to pursue you for a debt after you have filed for bankruptcy and the automatic stay is in place, it is important to contact your bankruptcy lawyer for advice. You can advise the creditor that you have filed bankruptcy, and no further pursuing should come from the creditor. If the creditor continues, they can be fined by the court system.
While bankruptcy is the filing process that will inevitably help you out of a trying financial situation, the automatic stay is part of that process that can grant you immediate peace of mind. If you need help with bankruptcy filing or would like to know more about the automatic stay process, reach out to Oaktree Law for further information.