What You Need to Know About the Automatic Stay in Bankruptcy

Posted on : June 4, 2017

When you file for bankruptcy, an automatic stay will immediately be applied to your lawsuit and all actions taken by a collection agency, government entity or creditor are paused. This is extremely important if you are being found in contempt for failure to pay child support, risk losing basic services such as unemployment benefits or welfare or if you are at risk of being foreclosed on or evicted. The automatic stay can be one of the most powerful reasons for filing for bankruptcy in the first place. The automatic stay may help you if you are facing multiple wage garnishments, utility disconnections,

This is extremely important if you are being found in contempt for failure to pay child support, risk losing basic services such as unemployment benefits or welfare or if you are at risk of being foreclosed on or evicted. The automatic stay can be one of the most powerful reasons for filing for bankruptcy in the first place. The automatic stay may help you if you are facing multiple wage garnishments, utility disconnections, collection of overpayment of public benefits, eviction or foreclosure. There are some situations, however, that the automatic stay cannot prevent. The IRS, for example, can still demand a tax return, issue a tax deficiency notice or audit you even if you file for bankruptcy.

A lawsuit against you to modify, establish or collect child support or to establish paternity can still proceed, money can be withheld from your income to repay your loan from a pension and if you had a bankruptcy case that was pending during the previous year then the automatic stay will terminate after 30 days, unless you request that a creditor or the U.S. Trustee continue it. In some situations, a creditor may ask the bankruptcy court to lift the stay, if it is not serving the intended purpose. Consulting with an experienced bankruptcy attorney can help you figure out your next steps.

In advance, you should know what the automatic stay in bankruptcy can do for you as well as the items that it cannot necessarily stop. Sitting down with your lawyer is strongly recommended prior to filing your bankruptcy petition.

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