How An Automatic Stay Works During Bankruptcy
When you are behind on the repayment of your debts, lenders can choose to take action to try to encourage you to repay a debt. This can include making a large number of phone calls, emailing, and sending letters. There are additional actions that might be taken depending on the nature of the debt. However, a bankruptcy lawyer can assist you by allowing you to obtain an automatic stay on all collection efforts.
Actions Taken By Lenders
If you earn a wage, a common action taken by certain types of lenders is to garnish your wages. This will lead to a percentage of your wages being taken to pay for your debt. However, if you file for bankruptcy, you can delay this process even if your wages will be garnished by the IRS.
If you have a mortgage, the mortgage lender might choose to foreclose on your house and you might be evicted. The lender might decide to sue you for the debt that is owed or create or enforce a lien against you. For example, they might try to take your house or car. However, with an automatic stay, they will not be able to take any of these actions and cannot contact you until the bankruptcy proceedings are over.
Debts That Are Not Exempt
There are certain obligations you will need to meet regardless of whether you file for bankruptcy or not. For example, you will still be required to make child support payments and IRS deficiencies. Therefore, you'll want to bring up all of your debts with your bankruptcy lawyer so you can determine if you will be free from collections or if there are other actions you should take.
The Automatic Stay Is Not Permanent
The automatic stay lasts for the duration of the bankruptcy court proceedings. If your bankruptcy is later thrown out of court, creditors will be able to resume collection activities. After your bankruptcy is over, your debts will be discharged and the creditors will no longer be able to pursue collection activities. However, if you take on more debt after your bankruptcy, creditors can pursue debt collection for any new debts.
The automatic stay isn't simply there to help you; it also allows for creditors to not have to worry that one creditor will receive an unfair amount. However, with the help of a bankruptcy lawyer, you'll be able to get a clean slate.
To learn more, contact a bankruptcy attorney.