The Automatic Stay: it can stop foreclosures, repossessions, and even balding. Well, that last one is an exaggeration but it illustrates the point that the Automatic Stay in bankruptcy is an incredibly powerful tool available to help you.
What is the Automatic Stay?
- It is a protection available under bankruptcy law that stops certain legal actions against you including:
- Foreclosures on your property
- Repossession of your cars or personal items
- Some types of wage garnishments
- Collection of overpayments of certain public benefits
- Division of assets in a divorce court
- and many more
- Those actions are “paused” until they are either dealt with by the bankruptcy court or until the bankruptcy case is complete.
What can the Automatic Stay not do?
- Stop a lawsuit related to establishing paternity
- Stop criminal proceedings against you
- Stop the “separation” part of a divorce proceeding
- And some other types of proceedings
When does it go into effect?
- In most cases, it protects you for the moment you file bankruptcy regardless of whether your creditors know that you have filed or not. In the classic example, if you file bankruptcy at 10:01 a.m. and the bank tries to sell your house at a foreclosure sale at 10:02 a.m., that sale is not valid regardless of whether they know that you filed or have no idea about the filing.
- If this is your first time filing, the Automatic Stay will apply for your whole bankruptcy case. If you have filed multiple times before within certain timeframes, your Automatic Stay might be shorter or the Automatic Stay may not apply to you at first. However, you can ask the court to impose the Stay or lengthen its time period.
If you are facing one of the types of actions described above it might be in your best interest to meet with an attorney to discuss your options and whether the Automatic Stay can help you stay in your house or keep your car so that you can make it to work on time and get back on your feet.