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What is the Automatic Stay, and How Does It Work?

automatic stay

The automatic stay is one of the most important protections granted to debtors filing for bankruptcy, under either Chapter 7 or Chapter 13. The automatic stay can help you remain in your home and prevent any new liens from being filed against your property during your bankruptcy. Read on to learn more about the automatic stay and how it works.

What is the automatic stay?

The automatic stay is a feature of bankruptcy which temporarily prevents your creditors from attempting to collect debts which existed prior to the bankruptcy filing. As is implied by the name, the stay is automatically in place as soon as a debtor files for bankruptcy; you don’t have to take any action for it to kick in. For the duration of the stay, your creditors will be unable to take collections actions against you for the length of your bankruptcy action. This means they cannot foreclose on your home, file or continue to pursue a lawsuit against you in an attempt to collect a debt, repossess your property, garnish your wages, or freeze your accounts.

When doesn’t an automatic stay apply?

There is a short list of types of collections that are not subject to the stay, and can continue throughout a bankruptcy filing. These include actions regarding child or spousal support you owe, tax assessments or audits, and lawsuits based on debts or property which aren’t part of your personal bankruptcy estate. Additionally, creditors can request relief from a stay, which would permit them to continue to try to collect a debt from you even while the bankruptcy case is ongoing, but there are few situations where courts will grant relief from a stay, and creditors rarely request this sort of relief.

Delay can prevent you from benefitting from the stay

Delaying your bankruptcy filing could prevent you from obtaining the maximum possible benefit from the automatic stay provision. For example, the automatic stay will stop a wage garnishment, but you will often lose the money that was garnished before you filed bankruptcy and received the automatic stay. Speak with a seasoned Mississippi bankruptcy attorney to determine if you should act now to prevent future liens against your property.

If you are a Mississippi resident facing a growing amount of consumer debt and need professional legal help to assist you in wiping the slate clean, contact the bankruptcy attorneys at Gardner Law Firm for a consultation, serving Gulfport and surrounding areas at 228-436-6555.

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