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The automatic stay is a major benefit of bankruptcy

One of the major benefits of bankruptcy is the automatic stay, which immediately takes effect upon filing and stops creditors from taking action to collect debts during the bankruptcy proceeding.

2013-03-07
March 07, 2013 (Press-News.org) The automatic stay is a major benefit of bankruptcy

Article provided by Liviakis Law Firm
Visit us at http://www.liviakislaw.com/

Many people struggling with financial difficulties may wonder if filing bankruptcy is the ideal solution. One of the major benefits of bankruptcy is the automatic stay. An automatic stay immediately takes effect upon filing for bankruptcy and stops creditors from taking any further actions to collect debts during the bankruptcy proceeding. This stops creditor harassment, garnishments, bank levies and also prevents creditors from filing lawsuits to collect debts.

What the automatic stay applies to

One of the biggest benefits of the automatic stay is that in some situations it can be used to prevent home foreclosures. An automatic stay is temporary, so the bank may try to resume the proceedings once the automatic stay is removed. However, temporarily halting the foreclosure can give an individual time to bring his or her mortgage current and therefore prevent the foreclosure entirely.

The automatic stay also stops eviction proceedings for renters. Since courts generally favor landlords in eviction cases, the landlord is likely to eventually prevail. However, the automatic stay can give people additional time to search for new housing.

Utility companies are also forbidden from turning off utilities for 20 days after imposition of an automatic stay.

The automatic stay also applies to vehicle loans. However, if payments are missed, the creditor is likely to petition for removal of the stay. This enables the creditor to either reclaim the vehicle or modify the financing.

What the automatic stay does not apply to

There are a multitude of items that an automatic stay does not apply to, including:
-Child support payments

-Taxes

-Pension loans

In addition to not preventing efforts to collect any outstanding child support obligations, the automatic stay also does not prevent a family court from ordering an individual to cover costs associated with a court ordered paternity test. An automatic stay also does not prevent the Internal Revenue Service from requiring the filing of a tax return or payment of any owed taxes. Additionally, if a landlord already has a court ordered wrongful possession judgment, the automatic stay does not allow an individual to remain in rented property.

A new automatic stay does not apply every time bankruptcy is filed. If an individual files for bankruptcy after also filing in the previous year, the current automatic stay concludes after 30 days. It is possible to request that the automatic stay continue upon showing that the current bankruptcy was filed in good faith.

Creditors can attempt to remove the automatic stay

Attempting to collect debt while an automatic stay is in effect comes with serious consequences. Creditors face potential contempt of court charges or may be found liable for damages.

However, creditors can petition the court to remove the automatic stay. It is typically necessary to show that the automatic stay is not achieving its anticipated goal.

An individual experiencing financial difficulty can benefit from speaking to an experienced bankruptcy attorney. The attorney can provide creative solutions and help individuals achieve fresh financial starts.


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[Press-News.org] The automatic stay is a major benefit of bankruptcy
One of the major benefits of bankruptcy is the automatic stay, which immediately takes effect upon filing and stops creditors from taking action to collect debts during the bankruptcy proceeding.