What Is an Automatic Stay in a Texas Bankruptcy?

 Posted on April 30, 2020 in Automatic Stay

For most people, filing for bankruptcy is a last resort. It can be easy to dig yourself into a pit of debt that you are unable to climb out of. Once the bills start becoming due, it can feel like an ocean wave washing over you, with you struggling to stay above water. Not paying your bills can cause creditors to resort to collections actions, such as wage garnishment and repossession. Once you file for bankruptcy, however, all of those collections actions must stop. This is what is known as the automatic stay.

Understanding the Automatic Stay

The automatic stay is a provision in the U.S. Bankruptcy Code that temporarily halts collections attempts from all creditors. The automatic stay goes into effect immediately after you file for bankruptcy and prevents any and all creditors from contacting you about debts you may have with them. The automatic stay does not last forever. As soon as your bankruptcy case is finished, the automatic stay is lifted.

What Can the Automatic Stay Prevent?

The automatic stay is meant to stop creditors from performing a variety of collections activities while you are going through with your bankruptcy. This was meant to help keep things fair among creditors, to prevent one creditor from settling their debts over another, but it also helps the person filing for the bankruptcy. Here are a few things the automatic stay can prevent from happening:

• Foreclosure or eviction: The automatic stay prevents the completion of a foreclosure on your home or eviction from a place you rent. However, the automatic stay does not prevent foreclosure or eviction from happening. Your creditor can file a petition for the foreclosure to proceed, and mortgage debt is not discharged with a Chapter 7 bankruptcy, leaving you still responsible after the bankruptcy is over.
• Wage garnishments: If you have had creditors garnish your wages, they are not permitted to do so during the time that the bankruptcy case is open. You should be receiving your full wages once the automatic stay is in place, as long as the garnishment is not for secured debt.
• Repossessions: The automatic stay can also help prevent repossessions from happening on property that you do not fully owe yet, such as vehicles. Auto debt is also not discharged in Chapter 7 bankruptcies, which is why you must work out a repayment plan with your lender. As soon as the bankruptcy is over, your lender can repossess your vehicle if you have not worked out a repayment plan.

Our San Antonio, TX Bankruptcy Attorney is Here to Help

In some situations, creditors can be aggressive and intrusive into your life. If you have filed for bankruptcy, you should not be experiencing any collections actions against you. If you have creditors who are still trying to collect, you should speak with a skilled Boerne, TX bankruptcy lawyer. At the Law Offices of Chance M. McGhee, we can help you through your bankruptcy case. To schedule a free consultation, call our office today at 210-342-3400.

Sources:

https://www.investopedia.com/terms/a/automaticstay.asp

https://upsolve.org/learn/what-is-automatic-stay-bankruptcy/