The Automatic Stay, Repossessions, Shut-off Notices, and Foreclosures
Posted on 27. Mar, 2009 by emmettjones in Bankruptcy
Foreclosure rates are skyrocketing. Many employees have received pay-cuts, or lost their jobs entirely, making day-to-day living more difficult than it has ever been. Many are in danger of having vital utility services turned off, or losing their homes altogether. How does bankruptcy fit into these situations?
The Automatic Stay.
Although many people are afraid to file for bankruptcy because of the stigma that is attached to it, bankruptcy is actually a financial tool devised by the government to help those who are unable to financially help themselves. The reach of bankruptcy does not just apply to those who are in credit card debt, it also applies to those with other financial situations, such as those listed above. If nothing else, the bankruptcy code is designed to help people, not hurt them.
One provision that is of extreme importance to debtors is that of the automatic stay. The automatic stay is a bankruptcy provision that is activated as soon as a debtor files for bankruptcy, regardless of the chapter. In the simplest terms, the automatic stay freezes any action that any creditor could bring against you or has already brought against you. So, that electricity shut-off notice requiring you to pay money by next Friday? Its stopped. Have a pending sheriff sale on your house next month? Not anymore. About to have your car repossessed for not making payments? I don’t think so. Debtors who are in bankruptcy and under the protection of the automatic stay cannot be touched by creditors WHILE THEY ARE UNDER THE PROTECTION OF THE STAY.
So, the next time you receive a call regarding repossession of your vehicle, or you are unable to work out any sort of loan modification with your mortgage company, remember the automatic stay. Although every situation is different, maybe filing for bankruptcy can buy you the extra time needed to delay your sheriff sale, or save your car from being repossessed.
NOTE: As with everything on this site, it is important to discuss matters such as the automatic stay with a licensed bankruptcy attorney. Depending on your situation it is possible to lose automatic stay protection, or to only have said protection for a limited amount of time. Consult with an attorney about your particular situation to determine the best option for you.
