If you're worried about your finances, one of the things you may consider is bankruptcy. If you cannot afford to make your monthly payments and don't see a way to emerge from underneath a mountain of debts, bankruptcy can be a viable debt relief option.
One benefit of bankruptcy is that it comes with an automatic stay. Automatic stays put an end to collection actions for those struggling with creditors calling to pester them to make unaffordable payments.
What can an automatic stay do for you?
As soon as you file for bankruptcy, the automatic stay goes into effect. Automatic stays accomplish several things right away, including:
- Stopping evictions
- Stopping the foreclosure process
- Preventing your utilities from being shut off
- Stopping the government from taking back public benefits that were overpaid
- Preventing and stopping wage garnishment actions
Each of these things is important to your well-being. For instance, the court wouldn't want to see your home sold out from under you while you're focusing on getting your finances back in order. Likewise, a home without utility services isn't always safe.
What can't automatic stays do?
Of course, much like with anything, there are limitations to what automatic stays can do for debtors. Usually, the kinds of things your automatic stay can't stop are those that are true obligations, e.g., child support or income tax arrearages. Automatic stays also don't prevent wags from being garnished to pay back loans taken from pensions.
Are there other benefits of an automatic stay?
The above protections help, but they're not all that automatic stays do. A stay also prevents creditors from calling and harassing you for payments. If a creditor calls you, all you should do is tell him or her that you've filed for bankruptcy. At this point, it is not legal for a creditor to take compensation from you. To do so, the creditor actually has to go to the court and seek relief that way. The creditor must have the injunction lifted before he or she can pursue further claims against you. Normally, the injunctions are lifted only when the creditor can prove that the stay isn't serving the intended purpose.