Bankruptcy is designed to offer relief to debtors who have gotten in over their heads. For many debtors, the most immediate relief comes in the form of the automatic stay.
The automatic stay is an injunction that goes into place as soon as your bankruptcy petition is filed. It serves to put an immediate halt to most collection actions – including those harassing phone calls, text messages and letters. However, that’s not all that the automatic stay can do to help you. Consider the following.
You may be able to stall foreclosure or eviction
Are you in danger of losing your dwelling place through foreclosure or eviction? The automatic stay can halt the foreclosure process in its tracks (although that may not be permanent). Depending on what type of bankruptcy you file and your ability to catch up the arrears on your mortgage, you may be able to keep your home. If not, you will at least gain some time to make a plan and gather the funds to move.
If you’re a renter who is behind on your payments, the automatic stay may prevent your eviction – but only if the landlord hasn’t already received a court-ordered judgment that allows them to proceed.
You can avoid wage garnishments
Wage garnishments over debts are incredibly frustrating. When you’re already struggling financially, having a creditor take a cut of your pay before you even see it can deprive you of the ability to keep the utilities on and feed your family. Plus, many debtors find it humiliating to have their employers find out about their debts.
The automatic stay can stop many debt-related wage garnishments, which puts money back in your pocket and gives you a chance to rebuild. (You cannot use bankruptcy to stop certain kinds of garnishments, like those for child support or alimony).
When a creditor hounds you about a debt you can’t pay, it doesn’t accomplish very much – except make it harder to think and harder to see your way out of the financial hole that you’re in. If that’s your situation, it may be time to explore new debt relief options.
