The automatic stay is a court order that the court implements as soon as you file for bankruptcy. This stops your creditors from asking you for payments during the duration of your case. You will have to provide your attorney with a list of your creditors when you file. A copy of the automatic stay will then be provided to them, preventing them from taking any further debt collection action from you.
The automatic stay makes filing for bankruptcy even more compelling for people who are at risk of getting evicted, being foreclosed on, or who stand to lose essential resources such as their paycheck or utility services.
How the automatic stay can help you temporarily:
In case of the following emergencies, here are the ways it can help you:
Foreclosure: Keeping your home ultimately depends on the bankruptcy chapter that you file under. But the automatic stay will stop your foreclosure proceedings. Chapter 13 allows you to keep your home with a three-to-five-year replacement plan. Chapter 7, however, doesn’t let you keep your home if you’re behind on your payments.
Eviction: The automatic stay will pause the eviction proceedings temporarily unless the landlord has a judgment of possession against you. In this case, the automatic stay has no effect, and the landlord can evict you.
Another exception is if you’ve endangered the property or used controlled substances. In this case, the automatic stay will not take any effect. Even if the automatic stay can relieve you of a few days or weeks, your creditors can ask the court to lift your stay and allow the proceedings to continue.
Wage garnishment: The automatic stay will let you take home your full salary, and the court will discharge you from any qualifying debt, including credit card balances and personal loans. However, alimony and other commonly garnished debts such as child support will not be discharged. Whether you have to pay back overdue child support payments and back taxes will depend on the type of bankruptcy you file.
Utility connections: The automatic stay will prevent the disconnection of your utility services for at least 20 days. You can file for a bankruptcy discharge on your utility payments even if the amount is small when you can discharge any other debts that you might have. However, the utility company can insist that you pay a deposit to make sure that you pay future payments.
What proceedings does the automatic stay not prevent?
Specific tax proceedings: You are still under audit from the IRS. The IRS can issue a tax deficiency notice or demand payment. The automatic stay offers relief by stopping the IRS from seizing your home or property and from a tax lien.
The rest of your tax payments depends on whether your tax gets discharged under the chapter you file under.
Certain court charges: You cannot stop criminal proceedings and support actions such as a lawsuit against you seeking to collect child support or establish paternity by the automatic stay.
Repeated filings: If you have a filing pending from the previous stay, termination of the automatic stay will be put into effect after thirty days unless your trustee or creditor asks for the stay to continue by proving that the current case is legitimate and in good faith.
How your creditors can lift the automatic stay
It is possible for your creditors to lift the stay by filing a motion to do so.
They may involve the following:
- A foreclosure proceeding
- A lawsuit in another court
- A dispute between you and your landlord
The creditor must show that the automatic stay will cause the creditor financial loss. It is also important to show that no benefit or harm will befall the other creditors.
There is a difference between secured and unsecured creditors. Secured creditors will try to lift the automatic stay to collect on the collateral. However, unsecured creditors will try to wait until the proceedings are over since Chapter 7 takes only a few months to complete. In the case of Chapter 13, since you have to repay the creditors based on a three-to-five-year repayment plan, the same will occur.
For further information and to ensure a way to secure your financial future, schedule a complimentary consultation with The Wright Law Alliance. We have over 25 years of experience helping Georgia residents successfully navigate bankruptcy and help individuals and companies get back on their feet. Call us now.