When you file for bankruptcy in New Jersey, whether it’s Chapter 7 or Chapter 13, a powerful legal tool called the automatic stay immediately goes into effect. It stops most creditors from trying to collect debts from you.
This gives you some much-needed breathing room while your bankruptcy case proceeds. Here are some of the ways the automatic stay protects you.
What the automatic stay covers
In all bankruptcy chapters, the automatic stay provides protection from various creditor actions, including:
- Credit card debt collection
- Medical bill collection
- Personal loan payments
- Most civil lawsuits
- Foreclosure proceedings (temporarily)
- Utility disconnections
- Most wage garnishments
- Bank account levies
Creditors also cannot repossess certain property, such as your car and household goods, meaning you can generally keep these essential items during the bankruptcy process.
What the automatic stay doesn’t cover
It’s important to understand that the automatic stay doesn’t protect you from everything. Some financial obligations and legal actions can still proceed even after you file for bankruptcy.
For example, certain tax proceedings (like tax audits) and family law matters, such as child support, alimony obligations or actions to establish paternity, are generally not stopped by the automatic stay.
Evictions are also not automatically stopped if the landlord obtained a judgment for possession before the bankruptcy filing.
A temporary relief
While the automatic stay provides immediate relief, it is temporary. Creditors can sometimes file a motion with the court to lift the stay in specific situations.
Because bankruptcy laws can be complex and are subject to change, consider consulting with a bankruptcy attorney to discuss your specific situation and understand how the automatic stay applies to you.
