The Automatic Stay in Bankruptcy

When you’re burdened by excessive debt, it can seem like the whole world is about to crash down on you. In addition to your credit card bills, you may also have back mortgage payments and utility bills that, if left unmet, can put your safety and well-being in the balance.

When facing this precarious situation, some people choose to file for bankruptcy. In a bankruptcy, your debts are discharged and you are allowed to make a fresh start. Bankruptcy can also give you relief from the frequent harassing calls and letters from creditors, can temporarily protect you from eviction, and can help prevent utility shut-offs. This is accomplished by what is called an automatic stay.

After filing for bankruptcy, the automatic stay helps halt many types of legal actions against you and your property. It basically lets creditors know that you are in the process of addressing your debt problem and that they should back off and allow you time to work out the situation. Because of the legal consequences of violating the stay, creditors are often willing to comply with the stay.

Does an automatic stay in bankruptcy always work?

Creditors can sometimes try to get around the automatic stay by asking the court to lift the stay. Sometimes this is successful, other times it isn’t. It depends greatly on the type of debt and the circumstances. In general, automatic stays can help prevent things like foreclosure for up to 20 days, and other types of actions for longer periods.

Bankruptcy isn’t a magic pill that fixes all your financial problems and it isn’t for everyone. However, sometimes it is the best choice for the circumstances. The best way to learn about your options regarding bankruptcy is to speak with an attorney who handles bankruptcy law. A Texas bankruptcy attorney knows the many intricate rules and regulations that surround the bankruptcy process and if an automatic stay can help you.