The automatic stay in personal bankruptcy cases

Some Florida residents who are struggling with unsustainable financial situations choose to file for bankruptcy to stop lawsuits filed by their creditors or prevent their paychecks from being garnished. An automatic stay is granted when an individual files a Chapter 7 or Chapter 13 personal bankruptcy, and it requires creditors to cease all collection efforts until the case has been resolved. The automatic stay can stop evictions and foreclosures, protect public benefits and prevent utilities from being disconnected.

The automatic stay stops both pending and existing paycheck garnishes and prevents utility companies from terminating service for at least 20 days. However, automatic stays do not prevent landlords who have obtained wrongful possession judgments from evicting tenants. Even when such judgments have not been obtained, automatic stays may only delay evictions by a matter of days or weeks.

Automatic stays do not protect consumers in all situations, and creditors may seek to circumvent them by petitioning the court to lift the injunction. However, they must be able to demonstrate that the stay is not working as intended in order to prevail. Automatic stays do not stop IRS audits or prevent creditors from taking action to recover monies owed on pension loans, and they are not taken into consideration during child support litigation.

Attorneys could explain how automatic stays can protect assets and paychecks and put an end to creditor harassment after a Chapter 7 or Chapter 13 bankruptcy has been filed, and they could also assure their clients that the nation’s bankruptcy laws were written to provide individuals with second chances and not to punish their regrettable decisions. Attorneys may also clear up many of the misconceptions and myths surrounding personal bankruptcy and its long-term impact on credit and borrowing.