Once you file for bankruptcy, you trigger an automatic stay. This is a form of protection for people who undergo bankruptcy, and thus, it is important for anyone filing to understand what it is and what it offers.
Regardless of the type of bankruptcy you file for, automatic stays will apply. In a nutshell, it prevents creditors from proceeding with their collection actions during the bankruptcy process. It can even provide other protections as well.
The protection automatic stays offer
Cornell Law School defines an automatic stay. As mentioned above, this is a form of protection against creditors who would seek repayment. It goes into effect once you file for bankruptcy, no matter what type.
In addition to protection from creditors, it offers other forms of protection, too. It can stop foreclosure, for example. Certain types of bankruptcy can even offer solutions to homeowners who feel worried about the potential loss of the home. Likewise, bankruptcy can even stop the eviction process in some cases.
If you feel worried about the disconnection of your utilities, bankruptcy might also be the answer. An automatic stay may prevent your utilities from getting disconnected for at least 20 days.
Halting of wage garnishments
It can stop wage garnishment, too. When you deal with garnished wages, it means you lose a portion to creditors out of every paycheck. Having this process halted can give you some financial relief as you get ready for recovery.
Finally, it can stop the collection of overpaid public benefits. The government can no longer seek the repayment of public benefits that they overpaid, which is often a welcome aid to those struggling with debt.
