The decision to file for bankruptcy is never an easy one, and the idea of losing your property, home, and car during the proceedings could be keeping you from taking the necessary steps to secure your financial future. In reality, when you file for bankruptcy, the court will also file a motion for relief from an automatic stay. Here are a few answers to some frequently asked questions you might have about an automatic stay while filing for bankruptcy.
What Exactly is An Automatic Stay?
Many people file for bankruptcy because they are in danger of losing their home, car, or have debt collectors contacting them several times a week. When you file for bankruptcy, the judge will automatically issue a stay, which halts any civil lawsuits against you and temporarily halts any collections against you.
Basically, this means that debt collectors are no longer able to legally ask for any money from you while you are in the midst of bankruptcy. Your automatic stay cannot eliminate any debts you have, and instead, it temporarily suspends some of your debt obligations. This will allow you to reorganize your finances and hammer out the specifics of your bankruptcy.
What Protections Are You Afforded Under an Automatic Stay?
There are certain debts that are suspended during an automatic stay. For example, if you are in the midst of a foreclosure on your home, the automatic stay can temporarily halt the foreclosure. This will allow you to stay in your home longer. Here are other debts that can be halted by an automatic stay:
- Collections from debts incurred before the bankruptcy, including credit card debt
- Vehicle repossessions
To fall under the protection of an automatic stay, the debt must have been accrued prior to the bankruptcy. Any debt you incur during the bankruptcy proceedings is not protected by the automatic stay.
What Can an Automatic Stay Not Protect?
There are some debts and obligations that are not protected by an automatic stay. This includes child support payments and alimony payments. Any lawsuits that began after the bankruptcy proceedings are not protected by the automatic stay, as well. Any debt obligations connected to a divorce, including divorces that were initiated after the bankruptcy, are also not protected.
An automatic stay is automatically put into place when you file for bankruptcy and can help protect you from losing your home, vehicle, and stop annoying collection calls. If you have any more questions about automatic stays, contact a local bankruptcy attorney.