By definition, an automatic stay immediately goes into effect as soon as you file for bankruptcy. If you still owe any creditors at the time you file, it protects you from their attempts to collect your debts. Not all collection attempts and penalties are protected against, however. Here’s what an automatic stay protects you from and what it does not.
What an Automatic Stay Protects You From
- Utilities being disconnected. Though it will not prevent them from being disconnected indefinitely, automatic stay can prevent your utility company from turning off your service for at least 20 days.
- Being evicted. If your landlord is attempting to evict you, automatic stay can postpone this process. This can be valuable time for finding other living arrangements.
- Wage garnishment. From the moment you invoked it, the automatic stay protects creditors from garnishing all your earnings to satisfy past debts.
- Repossession and foreclosure. Automatic stay prevents your car loan lender from repossessing your car. However, they may still be able to get permission to do so through the bankruptcy court. Additionally, an automatic stay temporarily stops a pending foreclosure.
What an Automatic Stay Doesn’t Protect You From
- Some tax proceedings. The IRS can demand for you to file a tax return and demand payment for your taxes regardless of whether the automatic stay is in effect.
- Child support. Automatic stay does not affect lawsuits attempting to establish paternity or modify child support payments.
- Criminal proceedings. Though automatic stay will prevent the debt portion of a criminal proceeding, it does not apply to any other aspects of your sentence, such as community service.
Automatic stay can be useful for being you some time to get your life in order and in protecting your wages. But it doesn’t protect you from all possible circumstances. Contact an experienced bankruptcy lawyer near you to learn more about automatic stay protections.