In bankruptcy law, there is something known as the “automatic stay,” which is issued whenever someone declares bankruptcy. This stay is critical to helping people who are declaring bankruptcy from falling into further financial ruin. But what exactly is the automatic stay, and why is it so important in bankruptcy cases?
What is the Automatic Stay?
In simple terms, the automatic stay is a court order that is automatically issued whenever someone formally declares bankruptcy. This “stay” puts on hold any ongoing proceedings against the person declaring bankruptcy, including collections, eviction, or foreclosure proceedings. While the automatic stay is in place, no one can seize the property of the bankrupt individual without the approval of the bankruptcy court.
What is the Purpose of the Automatic Stay?
The automatic stay’s primary purpose is to protect the property of people going through bankruptcy, so they have a better chance of rebuilding their finances once the bankruptcy process is done. It does this by protecting bankrupt people from losing their homes due to foreclosure or eviction, and also by protecting their money and property from seizure. That way, they have as many resources as possible to avoid financial ruin, and do not have everything they own taken away by creditors while they are sorting out their finances.
What Are the Benefits of the Automatic Stay?
As stated previously, one of the biggest advantages of the automatic stay is that it prevents homelessness by stopping any ongoing eviction and foreclosure proceedings. It also stops creditors from seizing or repossessing your property, and prevents your wages from being garnished. In addition, it also stops late fees or interest from accruing on late bills or unpaid debt, keeping your financial situation from getting any worse than it already is.
How Does This Affect Bankrupt People?
Thanks to the automatic stay, people going through the process of bankruptcy do not need to be afraid of losing everything they own to creditors. Because nothing of theirs can be taken without the permission of the court, they can be certain they will get to keep as much of their property as possible while navigating the bankruptcy system. However, to get the best possible benefit out of bankruptcy, it is important to speak to a bankruptcy lawyer with experience handling bankruptcy cases. They can help you figure out a plan that works best for you, and ensure you are in the best position possible to rebuild your financial future.
Bankruptcy is a complicated and stressful process, and one you shouldn’t attempt to undertake on your own. If you are in severe financial distress and considering bankruptcy, call the bankruptcy attorneys at McGuire, Pelaez & Bennett at 631-348-1702, or visit our contact page. Our offices are conveniently located in Central Islip, right here on Long Island. Our bankruptcy attorneys will work with you to ensure the best possible outcome for you and your family, and make sure that you gain the maximum possible benefit from bankruptcy protection.
Send Us An Email