How does the Automatic Stay Help You?
When you file a personal bankruptcy case, the automatic stay is immediately effective. The stay is very beneficial for individuals who have been facing financial troubles for a while or who are facing a financial emergency. The automatic stay is a type of injunction that prevents your creditors from taking collection activity against you and it halts any collection action that is already pending. The stay remains in effect while your bankruptcy case is pending.
A few types of collection actions and financial emergencies that the automatic stay can help you with include:
- Foreclosures. If you have a foreclosure action pending against you, filing for bankruptcy can temporarily stop it. We can use this time to help you negotiate with your bank or other mortgage lender. The stay also provides you additional time that you and your family can remain in your home.
- Evictions. If you rent your residence and the landlord is seeking to evict you from your home, your bankruptcy filing may postpone the eviction. We can review your individual circumstances and help you understand how your bankruptcy will impact an eviction. It usually depends on whether the landlord has obtained a judgment for possession.
- Garnishments. Creditors often use a garnishment to collect amounts owed to them. A garnishment allows a lender who has obtained a judgment against you to remove money from your bank account and/or your paycheck to pay the amounts owed. As soon as you file for bankruptcy, all garnishments must stop. Additionally, you may be allowed to eliminate (discharge) the debt that is the basis for the garnishment action. In fact, it is possible that the creditor may be required to refund a portion of the money garnished.
- Utility disconnections. If you have been unable to pay your utility bills, your bankruptcy filing may result in your utility service being reinstated. This can be extremely helpful if it is the middle of summer and your electricity has been turned off.
If you are facing one or more of the above situations, contact us to learn how filing a Chapter 7 of Chapter 13 can help you. We will review your unique situation and fully explain all of your debt relief options. Contact us today by calling (480) 888-7111 or submit a web request here.