When you file for bankruptcy, the “
automatic stay” will put an immediate stop to any lawsuits filed against you, as well as most actions against your property by creditors and
collections agencies.
The automatic stay is often a dominant motivation for people to file for bankruptcy; especially in cases where they are at risk of foreclosure, eviction, being found in contempt of court for failure to
pay child support, or losing necessary resources including
utility services,
welfare,
unemployment benefits, or their job (due to wage garnishments).
The automatic stay can help with many problems including the following:
There are also limits to what the automatic stay can do for you. The automatic stay cannot help in certain instances, including the following:
- Certain tax proceedings – however, the automatic stay does stop the Internal Revenue Service from issuing a tax lien and from seizing your property and income
- Support actions (child support and/or alimony)
- Criminal proceedings
- Loans from a pension
- Multiple filings
Also, creditors can sometimes sidestep the automatic stay by asking the
bankruptcy court to lift the stay if it is not serving its proposed function. For instance, if you file for bankruptcy the day before your house is to be foreclosed, have no equity, and you cannot pay your mortgage debts, the mortgage lender will likely go to the court and ask for authorization to proceed with foreclosure proceedings. The court would likely grant permission. This information can be very overwhelming and it is always advised to seek professional advice from an experience
Connecticut Law Firm should you reside or have a business in the
State of Connecticut.
Richard Croce -
Rich@rrc-llc.com
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