One of the greatest benefits of filing for bankruptcy is the automatic stay. The automatic stay is a court order that stops collection efforts and most civil lawsuits related to debt. Even if the stoppage is temporary, it gives you breathing room to determine your next move. Florida bankruptcy attorneys explain the bankruptcy process to you and help you understand the benefits of the automatic stay.
What Does the Automatic Stay Stop When It’s Enacted?
- Threats to disconnect utilities. If you’re receiving calls or letters threatening to turn off your gas, electric, water, or telephone service, the automatic stay ensures disconnection cannot occur for at least 20 days. This isn’t to say that you should file for bankruptcy if you’ve fallen behind on your phone or gas bill. But if you’re dealing with a mountain of debt and shutoff is a concern, filing for bankruptcy pauses the process and allows your utilities to remain on.
- Collection of public benefit overpayments. Anyone who receives an overpayment of public benefits could be responsible for repaying the overpayment in future benefit checks. They’ll even need to pay back the overpayment if they no longer receive benefits. The automatic stay prevents the entity that issued overpayment from collecting that amount from you.
- Wage garnishments. Once the automatic stay goes into effect, you’ll get to take home your full salary, as long as the garnishment.
- Foreclosure actions. How effective filing for bankruptcy is at stopping foreclosure efforts varies from case to case and is based on where in the process your mortgage lender is. However, filing for bankruptcy is one of the most effective ways to help with foreclosure. Additionally, you’ll want to carefully consider which chapter of bankruptcy will work best for you as a homeowner. Most homeowners file for Chapter 13 because it usually allows them to catch up on mortgage payments and stay in their homes.
- Eviction efforts. Like foreclosure, eviction puts you at risk of being homeless due to financial problems. The automatic stay stops eviction efforts as long as you file before your landlord receives a judgment from the court.
If you have questions about current eviction and foreclosure restrictions due to COVID-19, contact a Florida bankruptcy attorney to discuss your situation.
What Can’t the Automatic Stay Stop?
Unfortunately, some collection efforts won’t be affected by the automatic stay. For example:
- IRS debt collection that doesn’t include issuing tax liens and seizing property or income
- Court-ordered support actions, including alimony or childcare
- Criminal proceedings, including fines and community service obligations
- Loans from a pension
There are also limits regarding what the automatic stay can do if you’ve previously filed for bankruptcy within the last year. To learn more about how the automatic stay works if you’ve filed for bankruptcy more than once, check out this information from Nolo.com.
Is the Automatic Stay Permanent?
No. The automatic stay is a temporary measure that gives the court time to assess your debts. In some cases, the court grants a discharge of the debts. This means your legal obligation to repay the debt is eliminated, which is permanent.
In other bankruptcy cases, creditors can resume collections if they file a successful motion to lift the automatic stay. In most cases, these motions are related to mortgage debt, rent, or a lawsuit in another court. For the motion to be granted, the creditor must show they will lose money if the automatic stay remains in place and that the granting does not hurt other creditors.
Florida Bankruptcy Attorneys Help You Get a Handle on Your Financial Situation
If you’d like to know more about the benefits of the automatic stay and how it could help you deal with your financial issues, we can help. Contact the Law Office of Robert M. Geller at 813-254-5696 to schedule a free consultation.