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The powers of the automatic stay and the relief it provides

Personal bankruptcy protections can help struggling consumers in many different ways. One way that personal bankruptcy protections can provide relief to filing parties is through the automatic stay that halts creditor collection actions during the bankruptcy process. How the automatic stay may help them is valuable information for struggling consumers to have.

Automatic stay protections during bankruptcy

The automatic stay goes into effect once the filing party files for personal bankruptcy protection. This is true of Chapter 7 bankruptcy or Chapter 13 bankruptcy and some other types of bankruptcy as well. The automatic stay can help by:

  • Stopping wage garnishment – wage garnishment can add insult to injury for filing parties who are trying to get caught up or keep their heads above water and are having money taken out of their paycheck. The automatic stay stops wage garnishment during the bankruptcy process.
  • Stopping utilities from being disconnected – struggling consumers may need protection from having their utilities disconnected which the automatic stay can help do for at least 20 days.
  • Stopping foreclosure and eviction proceedings – the automatic stay may be able to help when the homeowner is under the threat of foreclosure. The automatic stay has the power to stop foreclosure proceedings but bankruptcy may be able to help with a more long-term solution to the threat of losing a home to foreclosure. In some circumstances, the automatic stay may be able to provide protection against eviction so it is helpful for struggling consumers to understand when that might be.
  • Stopping the government from seeking repayments – the automatic stay can help stop the government from seeking recovery of any overpayments of public benefits to the filing party.

Taking benefit of an automatic stay

The automatic stay applies to creditors, collection agencies, government entities and anyone seeking money from the filing party. The personal bankruptcy process provides protections throughout the process to struggling consumers and homeowners that they should understand when they are considering bankruptcy relief.