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Using an automatic stay in bankruptcy

One of greatest sources of relief that bankruptcy can offer is the automatic stay placed on collection efforts. This stay affects different types of accounts differently and does not automatically halt every kind of collections. However, it can still offer a great deal of relief from many different types of collection actions.

An automatic stay can help you get back on top of your financial affairs without feeling like you are attempting to sweep the ocean back with a broom. The automatic stay applies to most types of creditors and grants a person immediate relief from collections actions from qualified creditors.

This stay may keep a person's utilities from being disconnected for a certain amount of time, may stall a foreclosure action by a mortgage lender or may even stop an eviction in some cases. The stay also generally applies to most types of unsecured debt, such as credit cards, and may also halt wage garnishment.

However, the stay does not apply to every type of debt collector. A bankruptcy stay may not protect a person from collections actions stemming from unpaid child support.

Similarly, if a person faces legal proceedings that involve debt and other issues, they may not receive relief from the non-debt-related aspects of the proceedings. If, for instance, an individual faces criminal charges that involve debt, the criminal charges may proceed even if the debt portion respects the automatic stay.

Other issues, like tax proceedings, may also keep moving in the face of an automatic stay. If you hope to use the power of bankruptcy to grant you an automatic stay, be sure to consult with an experienced attorney to understand how a bankruptcy can help you and protect your interests.

Source: Findlaw, "The Automatic Stay: Stopping Creditors with Bankruptcy," accessed Sep. 29, 2017

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