How the automatic stay in bankruptcy proceedings can help a filer get back on track

| May 15, 2020

The automatic stay is one of the benefits to filing for bankruptcy. When someone files for bankruptcy, the court orders a stay on all attempts to collect debts from the filer. In part, the reason for the automatic stay is to give the filer some breathing room so they can figure out a repayment plan. It also makes the process more manageable for the courts, which do not have to deal with endless modifications to the bankruptcy petition as the filer makes incremental payments throughout the process.

The automatic stay can provide filers with relief from the constant phone calls, emails and letters that frequently come along with being in debt. While the automatic stay does not last forever, ideally, it will last throughout the proceeding. If that is the case, the debts prompting the phone calls and letters may be discharged, eliminating the annoyances entirely.

Essentially, the automatic stay stops creditors from taking any steps to collect a debt from the filer. The following are examples of how the automatic stay can help those suffering from constant financial stress:

  • Eviction – Landlords cannot generally evict tenants who file for bankruptcy, even if the tenant files after the eviction proceeding was initiated.
  • Foreclosure – The automatic stay will generally prevent a foreclosure from moving forward, even if the bankruptcy was filed after the foreclosure began. However, it is possible that the lender will move to lift the stay and proceed with the foreclosure.
  • Utility disconnections – Utility companies and municipalities cannot shut off services if an automatic stay is in place. However, courts may allow the utility company to require a deposit.
  • Wage garnishment – When an automatic stay is in place, debt holders cannot garnish a filer’s wages and all garnishments must cease.
  • Harassment – Creditors are prohibited from engaging in the typical harassment that have come to be expected, such as, frequent phone calls and threatening letters.

Of course, the automatic stay will not prevent all actions to collect a debt. An automatic stay will not prevent the following:

  • Criminal proceedings
  • Pension loans
  • Previously filed and adjudicated evictions
  • Domestic support obligations

In addition, the automatic stay will be limited if the filer has previously filed for bankruptcy in the past. For example, someone who filed for bankruptcy in the previous year can only obtain a 30-day stay. If someone has filed for bankruptcy twice in the last year, they cannot obtain an automatic stay at all. In some cases, the court will allow the stay to be lifted, however, this is relatively rare.

If you are considering filing for a Georgia bankruptcy, but are not sure that bankruptcy is right for you, contact the dedicated Georgia bankruptcy attorneys at the law firm of Morgan & Morgan, P.C. To learn more, call 706-510-3920 to schedule a free consultation today.

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