The decision to declare bankruptcy should never be taken lightly, since the impact on your ability to get credit can last for years. For many, bankruptcy is a final, desperate option that occurs only when they are about lose everything to foreclosure and wage garnishments. The threat of losing basic human necessities like a home and utilities creates a compelling reason to file bankruptcy and take advantage of one of the key benefits of bankruptcy, the automatic stay. Read on to learn more about how this powerful tool can help you keep some of your property and keep a roof over you and your family's heads.
The Automatic Stay Benefits Filers in These Ways
1. You may stop or at least delay foreclosure proceedings on your home. This temporary reprieve could allow you some time to get caught up on your mortgage and prevent a loss of property. Not having to send buckets of money to your credit cards could free up some cash to instead appease your mortgage holder. Additionally, you will now have some time to make other living arrangements if you cannot bring your mortgage up-to-date.
2. Wage garnishments will cease immediately. Since you will now be able to take a complete paycheck home, you could get caught up on other debts that that cannot be discharged in bankruptcy or to keep your home or car. Not all garnishment activity will stop, however; child support garnishments will continue regardless of a bankruptcy filing. It should be noted that the debts that led to the garnishment may not be dischargeable, so you will still be responsible for paying them. The garnishment activity on those obligations will stop, however.
3. You can keep your water, electricity, gas and telephone from being disconnected for past due bills, at least for 20 days.
4. If your landlord has not already filed eviction proceedings in court, you may be able to stay in your home, at least temporarily.
The Automatic Stay Cannot Help You In These Ways
1. Alimony (spousal support) and child support obligation are not dischargeable debts in bankruptcy, and wage garnishments or other punitive actions in connection with those debts are not covered by an automatic stay.
2. Taxes owed to the IRS or property taxes owed will still need to be paid. If you have an installment plan for repaying your debt you must continue paying as agreed. The automatic stay does, however, prevent a lien from being placed on your property.
3. Money owed to the courts, such as fees and penalties, must still be paid as ordered.
While an automatic stay doesn't cover every debt, it does give you a chance to catch your breath and maybe even catch up on your financial obligations. Contact a bankruptcy attorney or law firm like Legal Clinic Of Jerry Paeth for more information about automatic stays.
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