Pennsylvanians who are in debt and do not know how they will get back on stronger financial ground are wise to consider bankruptcy. Many benefits of personal bankruptcy are relatively well-known. That includes the chance to discharge debt, restructure debt and put a stop to creditor harassment. One part of the process that should also be understood and will likely help the debtor feel better about the situation is the automatic stay. Understanding the automatic stay and how it helps is important before filing for bankruptcy.
As soon as the debtor files for bankruptcy, there will be an automatic stay protecting the debtor from being contacted by bill collectors and creditors. If there is a lawsuit that has been filed, this will also be stopped. There are numerous benefits from the automatic stay. People might be facing the prospect of their utilities being disconnected. This can happen if the person is behind on the payments. Gas, electric, water - all can be shut off. An automatic stay will put a stop to this for a minimum of 20 days.
Those who are in the process of having their home foreclosed upon will also be shielded by the automatic stay. It is vital to remember that once the automatic stay is lifted, the foreclosure can start again. For those who want to retain their property, Chapter 13 bankruptcy is a better option than Chapter 7. An automatic stay can protect a debtor from being evicted from a home. This is contingent on whether the landlord has made a court filing yet. If one was already filed, the person might not be able to prevent an eviction. For a debtor who is dealing with wage garnishment, the automatic stay will stop that too.
It is essential to remember what an automatic stay cannot do. It cannot stop certain tax proceedings such as when the Internal Revenue Service is seeking an audit or if the IRS wants a tax return to be filed. Those who owe child support will not be protected from needing to make payments with an automatic stay. There are other times when the automatic stay will not protect a debtor. For information regarding an automatic stay to help a person who is dealing with debt problems, a legal professional experienced in bankruptcy can help.
Source: bankruptcy.findlaw.com, "The Automatic Stay: Stopping Creditors with Bankruptcy," accessed on Jan. 22, 2018