The Quick Solution To Debt Woes: The Automatic Stay

30 May 2018
 Categories: , Blog

Many people know that they can file for a chapter 7 bankruptcy and get rid of their debts, or at least most of them. There is, however, another big benefit from filing bankruptcy and it happens before you even know it. Read on to find out how the automatic stay can help you deal with your financial situation in no time flat.

Pauses Collection Activity

When it comes to being behind on bills, few creditors are more aggressive than credit card companies and collection agencies. While there are rules about when, where and how often creditors can contact you, even those that obey can cause misery. The automatic stay works very well to put an end to all collection activity. No more letters or phone calls, no matter what. All creditors will be sent a copy of your bankruptcy filing and they must never contact you again. If you do get a stray call just respond by giving them your bankruptcy lawyers name and number and your federal case number.

Addresses Wage Garnishment

If you've had to share your hard-earned pay with a creditor then you already know how disruptive wage garnishments can be to your take-home pay. Filing a chapter7 bankruptcy is like getting a pay increase because your wage garnishments will be halted while your bankruptcy progresses. You should keep in mind, however, that wage garnishments that are the result of taxes owed to the IRS or for child support purposes will continue to be in force. Also, the original debt that led to the garnishment may or may not go away with your bankruptcy.

Freezes Foreclosures

When you fall on hard times you may have had a struggle keeping up with those mortgage payments and the lender may be taking legal action against you. Losing a place to live is a huge burden to consider, but the automatic stay offered by bankruptcy will freeze those foreclosure proceedings and buy you some time.

Pauses Utility Shut Offs

Almost as bad as losing your home is losing your electricity and other utilities. Once you file for chapter 7 you are guaranteed to put any shut-offs on hold for at least 20 days. That may not sound like a lot of time but you should have more cash available once you no longer need to pay those high minimum payments on your credit cards and have your entire paycheck back from garnishment. The stay on utility shut-offs applies to electricity, gas, water and your landline phone. Cell phones are not included in the stay, unfortunately.

To learn more about this beneficial aspects of a chapter 7 filing speak to a bankruptcy lawyer such as Charles J Schneider PC.