The instant you file bankruptcy, your creditors are required
by law to stop trying to collect. They must stop calling you
or sending you collection letters. They are not allowed to
repossess your car or sue you. Your wages can not be
garnished even if a garnish order is already in effect.
Automatic stays will remain in effect until you complete your
bankruptcy and receive a discharge, the BK judge lifts the
stay at the request of the creditor, or the property you are
seeking to protect is no longer part of the bankruptcy
There are instances when an automatic stay will not be in
affect the instant you file bankruptcy or will require a
motion from your BK lawyer to keep it in effect. These
situations typically pertain to individuals that have filed
bankruptcy more than once.
**There are many
debts that are not dischargeable by a bankruptcy.
Below are some details regarding what an automatic stay
In the event that your home is in foreclosure, the
automatic stay will put a halt to the foreclosure action.
Your best option to prevent foreclosure is by filing a
Chapter 13 bankruptcy. With a Chapter 13, you can save your
home from being foreclosed on anytime prior to the sale of
your home. It is important to note that even a Chapter 7
bankruptcy will halt foreclosure temporarily in most
If your gas and/or lights have been turned off by your
utility provider, they must reconnect your service as soon
as you file your bankruptcy. If you are not shut-off, but
are being threatened that you are going to be, an automatic
stay will prevent the disconnection. It is common to be
required to pay a small deposit by the utility company
within a reasonable timeframe. If you do not pay this
deposit, they can turn your lights and heat off even after
you file bankruptcy.
Once an automatic stay is in force, your car can not be
repossessed. However, you will ultimately begin paying your
car loan or turn the vehicle in during a Chapter 7 BK. On
the contrary, a Chapter 13 bankruptcy can save your car, but
you will be required to make all of your trustee payments,
or the vehicle creditor can request the judge to "lift the
stay" so they can repossess your car lawfully.
Declaring bankruptcy puts an instant stop to wage
garnishments and lawsuits instantly. You can take your
entire paycheck home and if the debts are able to be
discharged, you can likely eliminate all of your debts via
Food Stamps/SSI/Public Benefit Overpayments
In the event that you have received overpayment for a public
assistance agency, the agency can collect the overpayment.
However, once you file bankruptcy, the automatic stay
prevents the agency from collecting the overpayment unless
the agency demonstrates that the overpayment was a result of
As a result of the automatic stay, the IRS can not issue
a tax levy or seize any of your property in order to satisfy
an overdue tax debt. However, you can still be audited by
the IRS, demand that you file your returns, assess you a tax
liability, and demand that you remit payment for the
Below are examples of what an automatic stay will not stop:
If you have been charged with a criminal action, filing
bankruptcy will not prevent that state from imposing fines
and court costs and/or prosecuting you. However, fees you
owe an attorney can be stayed from collection.
A lawsuit seeking to establish paternity or to
establish, alter, or collect child support will not be
stopped by an automatic stay.
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Is Bankruptcy Good or Bad?
Types of Bankruptcies
Importance of Credit After Bankruptcy
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