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Can bankruptcy’s automatic stay help you?

Not so long ago, life was going well. You never dreamed that a few months later you’d be out of work, your bills would be piling up and you’re worried that you’ll soon be facing an eviction or a foreclosure.

Filing for bankruptcy may be your best option. Once you file your petition for bankruptcy protection, something known as an “automatic stay” goes into effect. The automatic stay is a federal injunction that temporarily halts most collection efforts against you, including claims on your property or residence. The immediate relief and breathing room that it provides are some of the primary reasons that debtors move forward with filing.

Typically, this means that:

  • Your utility bills cannot be turned off right away. In fact, your outstanding balances on those bills may actually be rolled into your bankruptcy.
  • Any foreclosure proceedings against you will stop. This doesn’t guarantee that the bank won’t eventually take the house, but it can buy you time to make other plans.
  • Your landlord may not be able to evict you. There are some situations (like when the landlord has already obtained a court judgment against you) where this isn’t true, but the stay does provide temporary relief to many.
  • Lawsuits, letters and threatening phone calls from creditors will stop. Until the bankruptcy trustee has their say, none of those actions are permitted.
  • Wage garnishments and overpayment collections from public benefits will cease (in most cases), which can provide you with some much-needed extra money.

If your debts have piled up and the financial stress has you feeling overwhelmed, find out what a bankruptcy attorney can do to help. Bankruptcy is far from the end of the world. In fact, for many people, Chapter 7 bankruptcy offers just the fresh start that they need.