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What the 'automatic stay' can do for you during bankruptcy

When creditors are hounding you and it feels like you are about to lose everything, bankruptcy can provide an immediate source of relief. As soon as you file for bankruptcy, an “automatic stay” goes into effect.

This bankruptcy provision is essentially a freeze on all creditor actions, which gives you and your attorney time to assess the next steps. In today’s post, we’ll talk about what an automatic stay can do for you.

First of all, an automatic stay is likely to result in far fewer phone calls and letters being sent to your house. Once the automatic stay goes into effect, creditor actions and communications with you must stop. This includes collections-related lawsuits.

An automatic stay can also keep you in your home and keep the lights on – at least temporarily. This provision often prevents utility companies from disconnecting your service for at least 20 days.

If your house is in foreclosure, the automatic stay will freeze these proceedings immediately. Whether or not you ultimately keep your house will be dependent on the details of your case. For the near future, however, the automatic stay will allow you to remain in your home.

Finally, filing for bankruptcy can stop wage garnishment. If your wages are being garnished, the automatic stay prevents creditors from taking any additional wages from your paychecks.

An automatic stay is among the best ways to give individuals immediate relief from the stress and chaos of significant debt. It is not a final solution, but it’s an important first step. If you are ready to find immediate relief from debt, please contact an experienced bankruptcy attorney.

Source: FindLaw, “The Automatic Stay: Stopping Creditors with Bankruptcy

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