The Power Of The Bankruptcy Automatic Stay
The need to file for a chapter 7 bankruptcy is often born of desperation. Whether it's poor financial decisions or an unexpectedly large emergency expense, the need to get relief from bill collectors and the threat of property loss can compel your decision to file for bankruptcy. While your bankruptcy can take several months to be final, one of the most powerful benefits of filing can become active the moment your bankruptcy petition is filed in Federal court. Read to learn more about the powers of the chapter 7 bankruptcy automatic stay.
Bill collection activities: While your credit card debts may still be some months away from total forgiveness, the automatic stay has an immediate effect on the actions of debt collections. Upon your filing, all attempts to collect all debts (with few exceptions) must cease. This stay creates a stoppage of all credit card past due balance collection, all threats to repossess property, most eviction threats and preempts letters and phone calls about your past-due utility bills. It should be noted that there may be a delay of several days before your creditors receive word of your bankruptcy filing, so any callers should be informed of your case number and bankruptcy attorney contact information.
Wage garnishment activity: If your paycheck is subject to garnishment, you will soon be able to take home your full paycheck. This extra money can come in handy to deal with other past due bills. It should be noted that wage garnishments for past due child support and some income taxes may continue. You may still owe the debt that led to the garnishment after your bankruptcy is final, depending on whether or not you were able to include it in your petition.
Foreclosures: Efforts to put you out of your home for past due mortgage payments must cease, at least temporarily. The possibility of ultimately losing your home to bankruptcy seizure depends on many different factors, such as the amount you owe, it's value (equity) and the total amount of your bankruptcy.
Evictions: As long as you declare bankruptcy before your landlord files eviction papers, you may have a temporary reprieve from eviction.
Utility shut offs: You can keep your electricity, water, phone and gas on for at least 20 more days using the automatic stay.
While some of these stays are only temporary, keep in mind that you will no longer need to make those punishingly high minimum credit card payments each month, freeing up cash to take care of some of the above debts. Speak to a bankruptcy attorney for more information about the automatic stay.
Talk to a debt relief lawyer like Clinger Richard S for help.