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Benefits of the automatic stay during the bankruptcy process

| Oct 28, 2020 | Firm News

The automatic stay goes into effect as soon as the filing party has filed for bankruptcy protection.  It provides important protections throughout the bankruptcy process that filing parties and those considering personal bankruptcy  protection to understand.

The automatic stay goes into effect once the filing party has filed for bankruptcy. It applies regardless of what types of personal bankruptcy protection the filing party has selected. It prevents creditor collection actions from proceeding while the bankruptcy process is still ongoing and also provides several other possible protections as well.

Automatic stay protections

The following are some protections that the automatic stay enables:

  • Stop wage garnishment: The automatic stay may be able to help stop the filing party’s wages from being garnished. Having wages garnished while struggling financially can be frustrating which is why the automatic stay may bring some welcome relief.
  • Stop utility disconnection: The automatic stay may also be able to provide some relief from the theft of utility disconnection. The automatic stay may be able to prevent the filing party’s utilities from being disconnected for at least 20 days.
  • Stop foreclosure: The automatic stay may be able to stop the foreclosure process and different personal bankruptcy options may be able to provide more permanent relief for filing parties worried about losing their home.
  • Stop eviction: The automatic stay may be able to stop the eviction process in some circumstances.
  • Stop collection of overpaid public benefits: The automatic stay may be able to stop the government from seeking repayment of any public benefits that were overpaid to the filing party.

The automatic stay offers several different types of protections and can also provide breathing room to struggling consumers. Debt can be stressful which is why struggling consumers should be familiar with debt relief options and the help they can provide, including through the automatic stay.