Automatic Stay

An important benefit to filing for bankruptcy is the automatic stay, a court injunction that goes into effect as soon as you file to protect you from creditor actions. The automatic stay can do many things, including stop lawsuits filed against you, keep utilities connected, and stop wage garnishment, foreclosure, and repossession.

How an Automatic Stay Can Protect You

The automatic stay can give you much-needed breathing room and help in many areas.

• Prevent utilities from being shut off. If you are behind on utility bills and you are threatened with disconnection, the automatic stay will keep your services on for at least 120 days.
• Stop foreclosure. The automatic stay will put an immediate halt to any foreclosure proceedings, although the bank can continue once the stay is lifted if you are not going to reaffirm the debt or otherwise catch up on payments.
• Stop eviction. In some cases, bankruptcy can stop an eviction. Due to the 2005 bankruptcy overhaul, this will only be true if your landlord has not yet received a court-issued judgment against you. The automatic stay may only give you a short reprieve from eviction.
• Stop a government agency from seizing overpayments of benefits. If you received public benefits before filing, the automatic stay protection will prevent the agency from collecting on overpaid benefits until the stay is lifted.
• Stop wage garnishment. The automatic stay will stop all wage garnishments to take home your entire paycheck.

What Actions Are Stayed in Bankruptcy?

The automatic stay protection covers many types of creditor actions:

Start or continuation of a judgment against the debtor

Enforcement of a judgment against the debtor

Repossession or foreclosure on the property of the debtor

Attempting to create, perfect, or enforce a lien against the debtor’s property

With the automatic stay, creditors must stop any collection activity on judgments like wage garnishments, levies, restraining notices, and other post-judgment remedies. A lien refers to judicial liens, statutory liens (like tax liens), and security interests under an agreement (such as a mortgage). This means filing for bankruptcy will halt foreclosure actions and seizure of collateral that is subject to a lien.

What an Automatic Stay Cannot Do

There are some situations in which the automatic stay cannot help:

• Child support, spousal support, and lawsuits to establish paternity or collect, establish, or change child support.
• Criminal proceedings.
• Some tax proceedings, such as a demand to file a tax return or demanding payment for owed taxes.
  Wage garnishment to repay a loan from your pension.

Even with the automatic stay in protection, creditors can get around the injunction by petitioning the court to lift the stay. In this case, the creditor must show the stay is not serving its intended purpose.

Contact a Bankruptcy Lawyer in LA

If you are facing serious creditor actions against you, filing for bankruptcy can give you a fresh start and breathing room in the meantime. A Las Vegas bankruptcy attorney can help you understand your options and decide if bankruptcy is the right move. Contact Vegas BK today for a free consultation with an experienced bankruptcy attorney who can answer your questions.