How can a bankruptcy automatic stay help you?

On Behalf of | Jun 30, 2017 | Bankruptcy |

When faced with considerable debt, many people in South Carolina may feel stress on a daily basis as they work to determine the best way to handle their situation. As someone in this predicament, you may fear that you will never feel financially free and that the loss of property may lie just on the horizon if a lack of payment results in repossession or foreclosure proceedings. However, if you think you have no options for dealing with repossession or other serious effects of financial issues, you may want to think again.

Bankruptcy could offer a variety of protections when it comes to potentially losing your property. Though you — like many others — may think that this debt relief option only presents more challenges, you may want to gain more information on the benefits bankruptcy proceedings can offer. One of the first major upsides to taking this route relates to the automatic stay.

Automatic stay

An automatic stay goes into place once you have completed your bankruptcy petition and gain court approval. The stay means that all creditors and bill collectors must cease actions against you while this protection is in place. As a result, many serious impacts that your financial troubles could have may come to a halt for a period of time. However, it is important to note that the stay may not keep actions at bay for the entirety of your bankruptcy case.

Of course, an automatic stay does not protect you from all financial predicaments, but it can assist with situations such as:

  • Disconnected utilities – If you fall too far behind on your utility payments, you may get a notice that the companies are going to shut off your utilities. However, bankruptcy can prevent such action for at least 20 days.
  • Foreclosure – The idea of losing a home can prove particularly heart-wrenching, and you may feel relief to know that bankruptcy could potentially help stop foreclosure proceedings for a time. The lender could possibly take steps to restart the proceedings after the automatic stay ends, but hopefully your case will allow you to get back on track to properly handle your mortgage.
  • Wage garnishment – Unfortunately, some creditors may have taken steps to have your wages garnished. You may feel that such a step lacks fairness, as you likely need your entire pay to take care of your needs and debts. Luckily, the automatic stay can cause garnishment actions to stop and allow you to keep the entirety of your pay.

Creditor actions

The possibility also exists that creditors will not wait until the automatic stay ends on its own before attempting to begin collecting again. Rather, they may file a motion with the court in hopes of having the stay lifted. If successful, the court may remove your stay, but the creditors would have to prove that the stay was not serving its purpose.

Gaining more information on the benefits of an automatic stay and how creditors may attempt to work around this protection may prove useful to you.

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