What is an Automatic Stay?
For those considering bankruptcy, learning as much as you can about what to expect during the bankruptcy process is crucial to making the best decision for your situation. One important element of bankruptcy to become aware of is the automatic stay. An automatic stay is an injunction that calls for an immediate stop of all collections attempts from creditors or collections agencies. From the moment a bankruptcy petition is filed, all insistent calls, letters, emails, and other forms of collections must immediately cease.
What does this mean for the bankruptcy filer?
The automatic stay is one of the beneficial aspects of filing bankruptcy. It can afford the filer time to:
- Remain in their home, in the case of impending foreclosure
- Avoid losing utilities such as electricity, water, etc., in the case of outstanding bills
- Protect their car from immediate repossession, in the case of overdue car payments
- Build savings in order to pay bills/debts incurred after the date of the bankruptcy filing or debts not discharged through bankruptcy
- Delay any litigation or lawsuit against you
While the automatic stay protects the debtor from collections from most outstanding debts, in some specific cases, the automatic stay can be lifted for certain creditors to collect on certain debts. In order to do so, the creditor must file a motion to be exempt from the automatic stay and cannot take action until a decision is reached by the bankruptcy court.
It is important to consult with an experienced bankruptcy attorney whenever considering bankruptcy for guidance on making the best decisions for your situation. Various factors such as timing of your filing, and therefore timing of the automatic stay, can result in increased or decreased benefits to the filer, depending on your financial situation. Discussing your financial situation with an experienced bankruptcy attorney before filing for bankruptcy can ensure the most beneficial outcomes for your specific situation.
LJ Law offers a free consultation to those considering bankruptcy who would like more information on their options as it applies to their specific circumstance. To schedule a consultation with our team, contact our office at (702) 998-1188, info@ljlawlv.com, or by scheduling a consultation online.
For additional resources on bankruptcy and other related topics, be sure to check out our Bankruptcy Law Blog and Bankruptcy Law TV playlist on Youtube.