One of the best tools available to bankruptcy filers is the automatic stay. When a person files for bankruptcy, the court will issue an order called an automatic stay. This puts an immediate stop to collection attempts, creditor harassment, along with any civil lawsuits filed against the person pursuing bankruptcy.
The automatic stay also provides some much-needed relief to filers who are likely facing a number of different stressors and collection actions at once. It allows the person to be freed from those conflicts so that he or she can work with the bankruptcy trustee on the best method to deal with creditors.
Benefits of the Automatic Stay
Many times, someone going through a difficult financial situation may find himself or herself at the point where he or she is on the brink of losing the most basic of living necessities. If someone is behind on their utility bill and could potentially lose water, electric or gas, the automatic stay will give that person an additional number of days to work out the situation and hopefully avoid their utility from being shut off.
The same applies for someone facing foreclosure. The automatic stay will put an immediate halt to the proceedings. If the filer rents his or her home and is facing eviction proceedings, the automatic stay may also provide some temporary relief. If the person’s landlord already has a judgment of possession against the renter when bankruptcy is filed, however, the automatic stay will not be able to help him or her from being evicted. If it has not gotten to that point in the eviction proceeding, the automatic stay will be able to put a temporary halt to the eviction so that the person can figure out his or her next step rather than being tossed out immediately.
Many filers also find themselves facing wage garnishment by the time they decide to file for bankruptcy. A bankruptcy petition will put a stop to most garnishments, although not all, specifically child support or alimony. Other garnishments for debts that would be able to be discharged in bankruptcy, such as personal loans or credit card debt, can be stopped and will likely end up being discharged at the end of the proceedings.
The key with an automatic stay is it provides relief to the filer who is likely feeling a great deal of stress at the time of filing. As a consumer, you have rights if the creditor does not follow the proper procedure and violates the automatic stay. Any violation should be immediately reported to your attorney, as well as the bankruptcy court. Depending on the violation and the behavior of the creditor, he or she may face fines, and severe penalties for the violation.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
Source: https://www.nolo.com/legal-encyclopedia/how-bankruptcy-stops-creditors-automatic-29723.html