The automatic stay is what stops creditors from pursuing collections against a debtor when bankruptcy is filed. In most cases, it either stops or temporarily ceases collection activity which gives you more time to handle finances. The action can be powerful against those who are at risk of eviction, foreclosure , utility disconnection and it can even disrupt wage garnishment .
The automatic stay is like a road block to creditors and collection agencies. If you are facing a utility disconnection, it may keep your utility from being disconnected for a couple of weeks. If you are facing foreclosure, the stay delays proceedings temporarily. While the lender may eventually proceed, Chapter 13 bankruptcy gives homeowners a likely chance to keep their home under an agreed payment plan.
The automatic stay may temporarily halt collection for situations such as overpayment of public benefits and eviction. In some cases, a creditor may try to work their way around the stay by getting the judge to grant certain collection activity. Certain tax collection situations may see a temporary halt in collections and the stay usually prevents liens or property seizures from the IRS. If you owe back child or spousal support, the stay may not be as effective but you have the chance to get other debts discharged and work on getting support payments made.
The automatic stay has helped many debtors by giving them time to work out their situation with their legal representative. Questions and concerns should be reviewed with a qualified bankruptcy attorney.