The Automatic Stay in Bankruptcy
If you’re struggling with overwhelming debt, creditor harassment, or the threat of foreclosure, filing for bankruptcy can provide immediate relief. One of the most powerful protections bankruptcy offers is the automatic stay, which puts a stop to most collection actions the moment you file. At Sieling Law, PLLC, we help individuals and families in Eden Prairie and the surrounding areas take advantage of the automatic stay to protect their assets and regain control of their financial future.
What Is the Automatic Stay?
The automatic stay is a legal protection that goes into effect automatically when you file for bankruptcy. It acts as an immediate order to stop most creditors from pursuing collection efforts against you. This means that as soon as you file, creditors are legally required to stop contacting you, garnishing your wages, filing lawsuits, or moving forward with foreclosures or repossessions.
The automatic stay provides critical breathing room for individuals and businesses facing financial challenges. It allows you the time to reorganize your debts, work out a repayment plan, or liquidate your assets without the constant threat of collection actions.
What Actions Are Stopped by the Automatic Stay?
Once the automatic stay is in place, most collection actions against you are paused, including:
- Harassing phone calls and letters from creditors
- Wage garnishments
- Bank account levies
- Foreclosure proceedings
- Eviction actions (in some cases)
- Repossession of vehicles
- Lawsuits for debt collection
- Utility disconnections
While the automatic stay provides broad protections, there are some exceptions. For example, certain debts like child support, alimony, and some tax obligations are not affected by the automatic stay, and creditors may still be able to take action in these areas.
How Long Does the Automatic Stay Last?
The length of time the automatic stay remains in effect depends on the type of bankruptcy you file. In a Chapter 7 bankruptcy, the stay typically lasts until your case is resolved or the court discharges your debts. In Chapter 13 bankruptcy, the stay can remain in place for the duration of your repayment plan, which is usually three to five years.
In some cases, creditors may request that the court lift the automatic stay, especially if they have a secured claim on property, such as a mortgage or car loan. If this happens, Sieling Law, PLLC can help you defend against these motions and ensure your rights are protected.
How the Automatic Stay Helps with Foreclosure
One of the biggest concerns for many individuals facing financial difficulties is the possibility of losing their home. Filing for bankruptcy triggers the automatic stay, which immediately stops any foreclosure proceedings. This gives you time to explore options to catch up on missed payments, renegotiate your loan, or even sell your home in an orderly fashion. In a Chapter 13 bankruptcy, you can create a repayment plan to get back on track with your mortgage, allowing you to keep your home.
Can the Automatic Stay Help with Wage Garnishments?
Yes! The automatic stay can also stop wage garnishments. If your paycheck is being garnished because of a court judgment, filing for bankruptcy will stop the garnishment, and in many cases, the funds that were garnished may even be returned to you. However, garnishments related to certain debts, such as child support or taxes, may not be stopped by the automatic stay.
The Importance of Consulting a Bankruptcy Attorney
While the automatic stay offers significant protections, navigating the bankruptcy process can be complicated, and not all debts are affected equally. That’s why it’s so important to consult an experienced bankruptcy attorney who can help you understand your rights and guide you through the process.
At Sieling Law, PLLC, we specialize in helping individuals and families find relief through bankruptcy. Whether you’re considering Chapter 7, Chapter 13, or you’re looking for guidance on which to use, our team is here to help you take full advantage of the automatic stay and protect your assets. We will work closely with you to evaluate your financial situation and determine the best path forward to achieve lasting financial stability.
Contact Sieling Law, PLLC for a Free Consultation
If you are struggling with debt and want to learn more about how the automatic stay can protect you, contact Sieling Law, PLLC today. We offer free consultations to discuss your options and help you make informed decisions about your financial future. Call us at [phone number] or fill out our online form to get started.
