How Bankruptcy Stops Your Creditors

How Bankruptcy Stops Your CreditorsOne of the biggest annoyances of dealing with debt is having to handle creditors and their collection actions or civil lawsuits. Aside from providing you with a fresh financial start, one great aspect of filing for bankruptcy is the automatic stay. This court order immediately stops most collection actions against your property by a creditor, government entity or collection agency. It can also put a halt to most civil lawsuits against you.

What an Automatic Stay Can and Can’t Do

The automatic stay is an appealing feature of filing for bankruptcy and may even help you through the following common emergencies:

  • Eviction – although temporary, an automatic stay might help if you are being evicted from your home. It might buy you a few days or weeks until your landlord requests the stay be lifted.
  • Foreclosure – an automatic stay will stop a foreclosure on your home. If you filed under Chapter 13 then you will be able to catch up on payments through the three to five year repayment plan. If under Chapter 7 bankruptcy, you will not be able to keep your home if you are behind, but the automatic stay will provide you with temporary relief.
  • Multiple Wage Garnishments – and automatic stay will halt most wage garnishments. You will also be able to discharge qualifying debt through your bankruptcy. Take note that things like child support and alimony will not be discharged.
  • Utilities – if the utility company is threatening to disconnect your gas, electric, water or telephone service, an automatic stay will stall it for at least 20 days. If you are facing this situation in addition to other debt you hope to discharge, bankruptcy is a viable option.

While an automatic stay is a wonderful thing, there are things it cannot prevent. The IRS can still issue you a tax deficiency notice, audit you, demand a tax return, issue a tax assessment or demand payment of an assessment. Any criminal proceedings will continue regardless of the automatic stay. This means you will still be obligated to carry out your punishment. An automatic stay will also not prevent a lawsuit against you seeking to establish, modify or collect child support or alimony. It is also important to note that a creditor can get by an automatic stay. If they ask the bankruptcy court to lift the stay and it is granted, you will be on the hook for the debts you owe them.

Joel R. Spivack Can Help You Navigate the Process

It is not an easy decision to choose to file for bankruptcy and the bankruptcy process itself is not an easy one. That is why it is in your best interest to seek the aid of an experienced bankruptcy lawyer.

If in New Jersey, look no further than the Law Office of Joel R. Spivack. He will provide you with honest advice on how to best handle your financial troubles. Furthermore, he can provide information on bankruptcy alternatives should you need them. Send Mr. Spivack a message online and see what bankruptcy options are available to you.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.

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Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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