What Is The Automatic Stay?

When it comes to bankruptcy, there is a magic phrase that those filing like to hear. That is the automatic stay. But what is the automatic stay and how does it help you when filing for bankruptcy? Jones Law Firm has the answers.

The Automatic Stay Defined

The automatic stay is the United States bankruptcy provision which temporarily prevents creditors, government entities, and collection agencies from pursuing debtors for the finances owed.

The moment you file for bankruptcy, you are protected and the automatic stay goes into effect. However, there are some things that the automatic stay does not protect against. These unprotected actions include tax audits, criminal proceedings, support payments, etc.

Temporary Protections

When you file for bankruptcy, you are afforded certain protections under the automatic stay. While these won’t last forever, they do work to protect you from actions including:

  • Wage Garnishment: A court order to your employer that a specific portion of your paycheck must be taken and sent directly to a creditor to whom you owe money until the debt is paid.
  • Home Foreclosure: Bank or lender repossesses the mortgaged property when you fail to make your mortgage payments.
  • Vehicle Repossession: Lender revokes vehicles after monthly payments have failed to be paid for an extended period of time. 
  • Lawsuits: Lawsuits can be a result of a variety of debts; however, criminal proceedings will still occur.
  • Creditor Harassment: Creditors calling, sending you mail, or coming to your home to harass you for payments.
  • Eviction: Being forced to leave your place of residence.
  • Utility Disconnection: Utilities being turned off like water, heat, electricity, gas, etc.

While these actions will temporarily be stopped when you file for bankruptcy, there are certain things that are not protected under the automatic stay.

Events The Automatic Stay Cannot Prevent

While the automatic stay protects you against quite a few actions, there are certain things it cannot stop from happening. Those events include:

  • Tax Proceedings such as IRS audits, tax deficiency notice, etc
  • Child and spousal support payments
  • Criminal proceedings such as fines to be paid, community service to be served, etc.
  • Loans from pension: if you have borrowed against your pension or IRA, you will still need to pay that back

How Long Does it Last?

So long as your bankruptcy filing was made in good faith, the automatic stay remains in effect as long as the bankruptcy does.

This length of time depends on the type of bankruptcy you file–either Chapter 7 or Chapter 13–and how quickly the process is worked through.

It is important to remember that if you have filed bankruptcy in the last year, your automatic stay is only in effect for 30 days. And, if you’ve filed for bankruptcy twice in the last year, you won’t get an automatic stay at all.

Learn How The Automatic Stay Can Help You With Jones Law Firm

Stop creditors from calling by filing a bankruptcy claim with the help of The Jones Law Firm today.