One of the most significant benefits of filing for bankruptcy is the automatic stay. This is a court order that goes into effect the moment you file your bankruptcy petition. Think of it as a legal shield that protects you from creditors and collection actions.
An automatic stay allows you to breathe and regroup – at least for a while. Creditors can no longer call, email or write to demand payment. They cannot seize your property either to recover a debt.
What does the automatic stay stop?
If you’re behind on mortgage payments, the stay temporarily halts foreclosure proceedings. This doesn’t mean your mortgage disappears, but it can buy you time to negotiate with your lender or explore other options. Similarly, the stay can delay eviction unless your landlord has already obtained a judgment to remove you.
Additionally, if your paycheck is being garnished, that stops (with some exceptions). Most lawsuits related to your debts will be put on hold. The stay also prevents utility companies from shutting off your water, electricity or gas for a limited time. This can be a crucial lifeline if you’re already struggling.
What isn’t covered?
Not all debts and legal actions are stopped. Child support, alimony and certain tax obligations continue despite the stay. Criminal proceedings also continue. If you’ve filed for bankruptcy multiple times in a short period, the stay may be limited or even denied.
The automatic stay is one of the most valuable aspects of filing for bankruptcy. While it’s not a permanent solution, it’s a critical step toward financial recovery. Seeking legal guidance if you’re considering bankruptcy can help you understand this protection and feel more in control during a challenging time.
