If you’ve looked into the bankruptcy process at all, you’ve probably come across the automatic stay and wonder how it works. So what is an automatic stay? For starters, the protection it provides is one of the primary reasons why people file bankruptcy at all.
In fact, the automatic stay is one of your best friends in the bankruptcy process, as it shields you from many of the most ferocious weapons that creditors have! Let’s take a look at what it can do for you.
What Can an Automatic Stay Do?
If you want to keep your home, an automatic stay is often the quickest and most effective way to stop a foreclosure and do so. When you file for bankruptcy, the bankruptcy court issues what is called an automatic stay. This prohibits all creditors from taking any action to collect their claim, including foreclosures.
When you file bankruptcy, an automatic stay goes into effect that stops most collection activities by creditors (child support or alimony are a couple of exemptions). This means that wage garnishments are also halted as long as the stay is in effect. The bankruptcy judge will only lift the automatic stay if the creditor has a valid reason for doing so.
Prevent Utility Disconnection
An automatic stay will prevent the disconnection of your water, electric, gas, or telephone service, for at least 20 days if you are behind on your utility payments. Although the amount of a utility bill itself rarely justifies a bankruptcy filing, preventing electrical service cutoff in January in Chicago might be justification enough!
In some cases an automatic stay will enable you to halt or prolong an eviction, allowing you more time to catch up on your rent. This mostly depends on whether your landlord has obtained a judgment against you for possession of property. If they did so prior to the moment you filed bankruptcy you may be out of luck. However, if they did so afterwards, they must then also apply for relief from the automatic stay, which can give you more time to work things out.
Actions Not Stopped by Automatic Stay
However, not all legal actions are subject to the automatic stay. The following civil actions may proceed regardless of the automatic stay:
- Criminal litigation
- Proceedings for traffic violations
- Child support
- Spousal support
- Paternity suits
- Child custody or visitation
- Domestic violence
- Collections of taxes that are not dischargeable
- Evictions in certain situations
Request a Free Consultation and Get Bankruptcy Help Today!
Hopefully at this point you better understand the prupose and capabilities of the automatic stay. If you'd like a face to face meeting to go over your financial situation, Suburban Legal Group PC can help! Our goal at Suburban Legal Group PC is to change your financial future. With some of the best bankruptcy attorneys in Chicago, we understand what you're going through and are sensitive your challenges and frustrations.
Request a Free, No Obligation Legal Consultation Today! There are no hidden fees, no obligations, no pressure and no risk in this consultation. Contact us today!
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Suburban Legal Group PC shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.