Filing For Bankruptcy Can Put Your Creditors On Hold
If you have more debt than you can pay, you probably worry that you are going to lose everything you own. You could be facing foreclosure, wage garnishment or property repossession. You may even face all three. The good news is that with the right legal guidance, you can make all of your creditors stop whatever action they are taking.
When you file for bankruptcy, the court will issue an automatic stay against your creditors. My name is Nicholas T. Grillo, founder of Grillo Law Firm. I assist clients throughout southern Mississippi with bankruptcy and debt collection matters. When you come to my office for assistance, I will take the time to explain how bankruptcy can put your creditors on hold.
How Does An Automatic Stay Work?
When you file for bankruptcy, you tell the court about all of your debts. The court issues an order, known as the automatic stay, which tells your creditors about your bankruptcy. Any creditor, government entity or collection agency must stop any legal action they are taking regarding your property. They must wait for the bankruptcy process to play out to see whether they will receive any payment on your debt.
In certain situations, the creditor may request that the court lift the stay order. For example, if you have a mortgage on a house and very little equity, and the mortgage lender knows that even after bankruptcy, you will not be able to make the payments necessary to keep the house, the court may allow the lender to continue a foreclosure. If you can show, however, that the bankruptcy action will free up the money you need to pay your mortgage, the court will likely keep the stay in place.
How Can An Automatic Stay Help You?
There are many situations in which the automatic stay will help you. The following are just a few examples:
- Wage garnishment – If your garnishment is for consumer debt, the stay will stop those withdrawals. Be aware, however, that child support, alimony and taxes cannot be discharged, and back payments may depend on your bankruptcy.
- Foreclosure – As noted above, in most cases, you can stop a foreclosure action immediately by filing for bankruptcy.
- Repossession of property – Creditors cannot try to repossess your property once you file for bankruptcy. Similar to a foreclosure, however, you may have to show you can continue your payments on the property during and after bankruptcy in order to keep it.
- Disconnected utilities – Utility companies cannot disconnect your service for a certain amount of time after your automatic stay.
No matter what type of creditor action you are facing, I am here to help. I will work with the bankruptcy court on your behalf to make sure your creditors stop their collection efforts.
Schedule A Free Consultation
I am happy to meet with you in a free initial consultation to review the benefits of an automatic stay in your case. Please call my Hattiesburg office at 769-447-3647 or fill out my online form to schedule an appointment.
This firm is a debt relief agency. It helps people file for bankruptcy relief under the Bankruptcy Code.