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What can bankruptcy’s automatic stay protect you against?

Tired of fielding phone calls from creditors demanding that you immediately pay up? Filing for bankruptcy could potentially give you the break you desire. How? Once you file for bankruptcy, something called the “automatic stay” period takes effect. While temporary, it can prevent creditors from continuing to contact you for a set time, giving you a chance to figure out your financial affairs.

While the length of the automatic stay period can vary, most people who file for Chapter 7 bankruptcy find that it lasts somewhere in the ballpark of 90 to 120 days. During this time, the automatic stay can protect you against not only creditor harassment, but also:

Wage garnishments

Currently losing a noticeable portion of your earnings to wage garnishment? Once the automatic stay takes effect, your creditor can no longer attempt to collect on your debt, effectively putting an end to the wage garnishment.

Foreclosure

Bankruptcy’s automatic stay may also help you guard your home against foreclosure. If your creditor has already begun to foreclose on your home, it must stop doing so while the automatic stay remains in effect. Note, though, that if you do not keep up with your mortgage payments, your creditor could potentially file a request to have the stay lifted.

Utility shut-offs

If you have ever had a utility company threaten to disconnect your services, you may understand all too well how anxiety-inducing this can be. Your utility service providers may not shut off your services while your bankruptcy case is ongoing, but they may be able to demand you give them a deposit.

While the automatic stay period can potentially give you some time to get your head above water, it does not free you from all financial obligations. You will still, for example, need to pay child support despite filing for bankruptcy, provided you have such an arrangement in place.

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