What Can the Automatic Stay Accomplish?

The automatic stay can prevent utility disconnections – including water, electricity, gas, and telephone service - for at least 20 days. While prevention of utility disconnections is not typically a good enough reason to file bankruptcy, it can be one factor, especially for people in climates with severely extreme weather, and/or small children or elderly people in their home.

If your home mortgage is in danger of foreclosure, the automatic stay temporarily will stop those proceedings. However, the mortgage lender may be able to proceed with the foreclosure later, depending on what type of bankruptcy you are filing. An attorney can help you determine which type is best, and devise a plan to help you keep your house.

The automatic stay may be able to help you avoid eviction. New bankruptcy laws are making it easier for landlords to proceed with evictions, and if your landlord already has already filed a judgement against you before you file, the automatic stay will not affect the eviction proceedings, and the landlord can continue with the eviction as if you have never filed bankruptcy. Also, if your landlord claims you are damaging or endangering the property, or using controlled substances on the property, the automatic stay will not be in effect.

If you receive public benefits and were overpaid, the agency is typically allowed to collect the overpayment from your forthcoming payments. The automatic stay can prevent this collection.
Many people file for bankruptcy if their wages are garnished. Especially if more than one wage garnishment is imminent. The automatic stay stops garnishments immediately.
Richard Croce - Rich@rrc-llc.com