What Should I Know About an Automatic Stay?

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People swamped with debt often face constant harassment from creditors plus the threat that unpaid utility companies will switch off their power or water. That is why many people file for personal bankruptcy. If you find yourself in a debt crisis, the automatic stay provision that bankruptcy offers can be just what you need to stop the harassment and give you greater peace of mind as you seek to rebuild your financial situation in New Jersey.

Per FindLaw, an automatic stay can put a stop to a number of creditor actions. You may be granted an extension on your electricity, telephone, water or gas services. It can also halt foreclosure actions or efforts to evict you from your apartment. Additionally, automatic stays stop your wages from being garnished. During the stay, you will be able to acquire your entire salary when you are paid. Also, if you were overpaid by a government agency, an automatic stay stops the agency from trying to collect on the overpayment.

This is not to say that automatic stays will halt every party from trying to collect from you. Child support payments are considered exempt from automatic stays. The IRS is also not prevented from requiring you to file a tax return or to pay some taxes, although an automatic stay will prevent tax liens against your property or income. A stay will also not stop your wages from being garnished to repay a loan against your pension.

You should also be careful if you file for bankruptcy if you had already filed for it in the prior year. If a creditor has filed to lift the stay from your previous bankruptcy, a court may look upon your new bankruptcy as a way to get around that and thus an act of bad faith. In any case, an automatic stay for a new bankruptcy will terminate in thirty days unless you, your trustee or a creditor can demonstrate you did not file a new bankruptcy for deceptive purposes.

Automatic stays, while they do not stop every effort from parties to collect from you, can provide enough relief so that you can work out a sound plan to exit bankruptcy and get back on your feet. Keep in mind that this article is not written to give you legal advice. Since bankruptcy issues vary from person to person, you should only derive educational benefit from this article.