How bankruptcy’s automatic stay provides relief from creditors

 Posted on March 11, 2021 in General Bankruptcy Topics

Having creditors constantly harass you at home or at work may have you scrambling for a solution, and you may be considering filing for bankruptcy. Bankruptcy may not be appropriate in all situations. However, many people dealing with creditor harassment find that doing so offers them relief in this area. How?

According to LendingTree, once you begin a bankruptcy case, something called the automatic stay comes into play. The automatic stay is an order that prohibits creditors from contacting you and trying to collect on your debts while your bankruptcy case is in process. The automatic stay does not temporarily put an end to all collection efforts or debt obligations, but it does stop the following from happening.

Wage garnishments

If you lose some of your paychecks to wage garnishment, this has to stop once the automatic stay takes effect. As long as the stay remains in place, you should be able to receive your paychecks in their entirety.

Utility disconnections

Having utility companies call you or come to your door and threaten to disconnect your services may have you panicking. Know, though, that your heat and water companies are not legally able to shut off your services when the automatic stay is in effect.

Evictions

If your landlord is threatening to kick you out, he or she may not do so during the automatic stay. However, there is one exception. Your landlord may ask the court to lift the stay if you continue to miss, or fail to catch up on, rent payments.

While bankruptcy's automatic stay extends you certain protections in these areas, this is not an exhaustive list of all collection efforts it temporarily halts.