When your finances start to become too much to manage, you may explore your options and consider filing for personal bankruptcy. Doing so may help you get the fresh start you need to get your finances back in order, and it may also give you temporary protection in certain areas.
According to LendingTree, once you start bankruptcy proceedings, an “automatic stay” takes effect. What is an automatic stay, and how might it help you as you begin navigating the bankruptcy process?
The automatic stay
Bankruptcy’s automatic stay is a period in which certain creditors must stop coming after you in their attempts to get you to pay up. The stay period does not last forever. Instead, it ends when either your debts undergo discharge or when your bankruptcy case comes to a close. However, while the automatic stay remains in effect, you may get temporary relief from having to pay certain debts.
Automatic stay protections
In what areas does bankruptcy’s automatic stay give you temporary relief? If your employer is taking a percentage of your wages because of a wage garnishment, it must stop doing so during the automatic stay period. During this time, your wages should return to whatever they were before your garnishment took effect.
You may, too, have been fielding phone calls from debt collectors trying to get you to pay back what you owe. Such communications must stop once the automatic stay takes effect, though, giving you temporary relief in this area. Bankruptcy’s automatic stay period may also give you some breathing room when it comes to making rent or mortgage payments. It typically also prevents utility companies from disconnecting your services during the stay period.