Jeffrey M. Rosenblum, P.C.
A Fresh Start

Understand the limitations and benefits of the automatic stay

Are you avoiding your phone, mail, and front door for fear that you will have to deal with collection attempts? If the answer is yes and you just can't make your payments, you might need to explore debt relief methods. One of these is bankruptcy.

There is a big benefit to bankruptcy if you are playing the "hide from creditors" game. This is the automatic stay. This is a way that you can rest easy and answer your phone and door or check the mail without worrying about creditors trying to collect.

The automatic stay goes into effect when you file for bankruptcy. This means that creditors can't try to collect money from you using any method. There are several benefits to the automatic stay, but you should know that each has limitations.

An automatic stay can help to stop evictions and utility disconnections. Both of these are only temporary measures because the proceedings can move forward when the stay is lifted. In the case of utility disconnections, there is a minimum of 20 days during which the shutoff can't occur.

The automatic stay will also stop certain wage garnishments. It won't stop child support payments or collections from the Internal Revenue Service.

Don't let the automatic stay be the deciding factor when you are thinking of filing for bankruptcy. You need to think about the situation in its entirety. This includes how your debts, assets, credit score and future will be impacted by the filing. Once you think about the entire situation, you can make an informed decision about filing.

Source: FindLaw, "The Automatic Stay: Stopping Creditors with Bankruptcy," accessed May 26, 2017

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