As someone thinking about filing for bankruptcy, you may consider doing so because you want to put a stop to the constant barrage of phone calls and communications you receive from creditors. You may, too, be thinking about doing so because you have concerns about losing your car, your home, your paycheck and so on, and you may have heard that bankruptcy’s automatic stay may protect you in these areas.
Just what is bankruptcy’s automatic stay, and how can it potentially protect you once you begin the bankruptcy process? In essence, bankruptcy’s automatic stay refers to the period immediately following your bankruptcy filing, which is a period in which creditors have no right to contact you to attempt to collect your debts. While the automatic stay does not necessarily protect you against all creditors, it does protect you against:
Losing a significant portion of your paycheck to wage garnishment can make it incredibly difficult to keep up with your bills, and it can also be embarrassing to have your employer know you have fallen so far behind on your finances. Once the automatic stay period begins, your employer can no longer garnish your wages on a creditor’s behalf.
As you may be well aware, some creditors try to collect on your debts using unscrupulous means. The Fair Debt Collection Practices Act sets guidelines that debt collectors have to follow when collecting your debts, but some do not follow these guidelines. Once the automatic stay period begins, though, creditors cannot harass or otherwise attempt to contact you during this period.
If your home has fallen into foreclosure, your creditors will typically have to halt the process once you initiate bankruptcy proceedings. If you do not pay your mortgage payments during this period, though, you run the risk of having the stay lifted and losing your home after all.
These are a few of the key things bankruptcy’s automatic stay can protect you against, but please note that this is not an exhaustive list of all areas to which it can apply.