How the automatic stay can help struggling consumers

How the automatic stay can help struggling consumers

| Sep 22, 2020 | Uncategorized |

Personal bankruptcy carries with it a variety of different, and important, protections that struggling consumers should be familiar with. One protection that kicks in right away once the filing party has filed for bankruptcy is the automatic stay.

What is the automatic stay?

The automatic stay prevents creditor collection actions while the bankruptcy process progresses. This can provide valuable breathing room for struggling consumers who have recently filed for bankruptcy and can also provide some relief from the stress and strain of creditor letters, phone calls and other forms of communication and contact.

Protections of the automatic stay

In addition to halting creditor collection actions during the bankruptcy process, the automatic stay provides several other protections as well including:

  • Eviction protections – in some circumstances, the automatic stay may help prevent eviction proceedings against the filing party.
  • Foreclosure protections – the automatic stay can stop the foreclosure process while personal bankruptcy protections may be able to provide more long-term relief for struggling homeowners.
  • Prevent utility disconnections – the automatic stay can prevent utility disconnections for at least up to 20 days.
  • Stop wage garnishments – the automatic stay can stop the filing party’s wages from being garnished which can be stressful to have wages garnished when the filing party is struggling to pay their bills.
  • Stop overpayment of public benefits from being recovered – the automatic stay can stop the government from taking back any overpayment of public benefits the filing party has received.

Automatic stay goes a long way in helping bankruptcy filers

The automatic stay is an important part of the overall personal bankruptcy process and the protections it provides. Filing parties should understand how personal bankruptcy can help protect them and provide debt relief.