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Bankruptcy And The Benefits Of The Automatic Stay

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “Does Bankruptcy stop foreclosure?”

When a person files for bankruptcy in North Carolina one of the biggest benefits that person receives is what’s known as the automatic stay. So what is an automatic stay and what can it help you avoid? Keep reading to find out.

 

Stop Sign Charlotte Bankruptcy Lawyer North Carolina Chapter 13 AttorneyWhat is an automatic stay?

 

An automatic stay is a part of the bankruptcy process that immediately stops any lawsuit filed against you by a creditor, collection agency or even government agency. This means that if someone has filed suit to evict you or foreclose on your home or even garnish your wages, an automatic stay can be a tremendous benefit that prevents these actions from moving forward.

 

What can the automatic stay actually stop?

 

An automatic stay is useful for many things, but not everything. For example, an automatic stay can help those who are behind on utility bills by preventing disconnection of service for a period of time. Although this may not be reason to file for bankruptcy in and of itself, it is a real benefit for those worried about having their electricity turned off.

 

Automatic stays also can help temporarily stop the foreclosure process, though this does not last forever. Eventually your creditor will be able to move the process forward and you should not expect the automatic stay to prevent that. Automatic stays are very useful for preventing eviction in the short term. Though it might buy you some time, the landlord can ask the court to lift the stay to allow for eviction, something many judges are happy to do. 

Automatic stays are great ways to stop wage garnishment. Once you file the stay goes in effect and remains in place for the duration of the bankruptcy unless a creditor is able to convince a judge to lift the stay. Courts only do this if there is a good reason and an unsecured creditor like a credit card company simply wanting money is not sufficient.

 

What can the automatic stay not stop?

 

While automatic stays can do many things, they can’t do everything. For example, an automatic stay has no power to stop most support collection lawsuits, such as those involving child or spousal support. Some tax issues are also not stopped by the automatic stay, though the IRS is not allowed to seize any of your property or income while the automatic stay is in place.

 

If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.

 

Source:

“Automatic Stay,” by LaToya Irby, published at About.com.

 

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