Making the decision to file a Chapter 7 or a Chapter 13 bankruptcy is difficult. One of the most powerful elements of bankruptcy that helps people make this decision is the promise of an automatic stay. This means an almost-immediate cessation in collection attempts made by your creditors. Most people find that once creditors stop their collection attempts, they feel better about moving forward with bankruptcy.
A Chapter 13 filing cannot stop everyone you owe from attempting to collect, but under the guidance of your attorney, it can stop most of them. To improve your clarity about this valuable bankruptcy benefit, the following sections will explain several things that creditors cannot do after you file.
Stops lawsuits: Once you file for bankruptcy, any legal action initiated by collection agencies or other creditors you owe stops.
Stops wage garnishments: If you are struggling with debt, you likely need access to your entire paycheck. A Chapter 13 bankruptcy puts a stop to all wage garnishments.
Stops or delays evictions: Unless your landlord took legal steps to evict you before you filed your bankruptcy, the automatic stay can give you additional time in your current residence.
Stops utility disconnections: While a Chapter 13 automatic stay will not protect you from utility disconnection indefinitely, it will give you up to 20 days to resolve your situation.
Stops foreclosure: One of the main benefits of choosing Chapter 13 to overcome your debt is its ability to stop foreclosure. You may even be able to keep your home during and after the bankruptcy process.
If you have filed a Chapter 13 bankruptcy in New York and received an automatic stay, it is wise to speak with your bankruptcy lawyer if you continue to be hounded by your creditors. Your attorney can look into your situation and take the appropriate steps to make sure that your creditors comply with the rules of the automatic stay.