The Automatic Stay in Bankruptcy

One of the best features of bankruptcy from the filer’s point of view is the automatic stay. Quite simply, the automatic stay prohibits creditors from continuing to go after you for debts. Of course, as with most laws, there are important nuances that you should understand, so the advice of a bankruptcy attorney could help you better understand the automatic stay. If you had filed for another bankruptcy and had a case pending within the previous year, the current automatic stay would end after 30 days absent a specific request by you, your creditors, the U.S. Trustee, or the bankruptcy trustee showing the bankruptcy was filed in good faith. Also, creditors can petition the court to lift the automatic stay in certain circumstances. As always it is recommended that you consult with a bankruptcy attorney regarding your specific circumstances, but in very general terms, what follows is what an automatic stay can and cannot prevent: Automatic Stay Could Stop: * Disconnection of utilities. If you’re behind on utility bills (water, gas, electric, etc.), the automatic stay can prevent them from being turned off for at least 20 days. * Eviction. Again, the automatic stay can stop eviction proceedings, but recent changes in bankruptcy law gives creditors more rights in this area. For instance, if a landlord claims you are endangering the property or using illegal drugs on the property or if he already has a judgment of possession against you, eviction proceedings could continue. * Foreclosure. The automatic stay may temporarily stop foreclosure proceedings on your house, although the creditor will likely still be able to continue with the foreclosure at some point. * Wage garnishments. The automatic stay stops wage garnishments that may be taken to satisfy court judgments. Automatic Stay Does Not Stop: * Child support and alimony. Actions seeking child support or alimony as well as obligations to pay them do not stop just because you filed for bankruptcy. * Criminal proceedings. If you have been charged with a crime that involves debt, it can often be separated into distinct parts — and the criminal aspect of the proceedings can continue. * Paying back pension loans. If you have borrowed money from your IRA, money withheld from your wages to repay that loan could continue despite the automatic stay. * Tax collection. The IRS can still come after you for unpaid federal income taxes, although the automatic stay does prevent the IRS from putting a lien on your property to satisfy a tax debt.