When deciding to file bankruptcy, the automatic stay is one of the most powerful tools for a debtor. The automatic stay is as an injunction order that immediately stops a number of debt collection actions against you and your property, such as civil lawsuits, a wage garnishment, and/or a vehicle repossession. While it may sound like a straight forward concept, the automatic stay can be complicated, and you should seek advice from a qualified bankruptcy attorney on how it can protect you and your assets under your particular circumstances.
How the Automatic Stay Protects Debtors in a Bankruptcy Case
Generally, as soon as you file for bankruptcy—whether you file for Chapter 7 bankruptcy, Chapter 11, or Chapter 13 bankruptcy, or another type of bankruptcy—the automatic stay can at least temporarily put a halt to a number of debt collection actions. Depending upon the type of bankruptcy case and the specific financial issues involved, the automatic stay might be able to stop debt collection actions for the duration of the bankruptcy proceedings. The following examples are among the most important actions that the automatic stay can prevent or stop:
- Foreclosure: If you are facing foreclosure, the automatic stay can prevent a foreclosure from moving forward. In a Chapter 7 bankruptcy case, the halt to the foreclosure proceeding is normally temporary, and could still result in the sale of your home by a Chapter 7 Trustee. However, if you file for Chapter 13 bankruptcy, the automatic stay can stop a foreclosure, and offers a reorganization plan to allow you to catch-up on your mortgage payments over time and remain in your residence without the looming risk of To be clear, in Chapter 13 bankruptcy cases, the automatic stay stops foreclosure and the homeowner ultimately can keep their home.
- Eviction: When you rent your home and are at risk of being evicted, the automatic stay can temporarily halt an eviction action, and potentially offer an option to remain in the lease depending on the
- Civil lawsuits: The automatic stay prevents a creditor or debt collector from suing you or moving forward with a lawsuit against
- Repossessions: If you have a vehicle, the automatic stay can temporarily halt a repossession to allow you to keep your automobile, for example, as your bankruptcy case moves
- Wage garnishments: Once the automatic stay takes effect, future wages garnishments can usually be
Limitations to the Automatic Stay
There are some types of debt (and debt collection actions for those debts) that are not included in the protections associated with the automatic stay under the U.S. Bankruptcy Code, but can be protection upon confirmation of reorganization plan under the bankruptcy code.
Contact a Middle Tennessee Bankruptcy Attorney
Do you want to learn more about how the automatic stay can protect you in your bankruptcy case? Do not hesitate to contact a Tennessee bankruptcy attorney at Lefkovitz & Lefkovitz. Our firm serves all of Middle Tennessee’s bankruptcy needs, and we can speak with you today.Contact us online or call us in Nashville at 615-256-8300 or in Cookeville at 931-528-5297.