One critical part of every bankruptcy is something known as the “automatic stay.” This legal order, while fairly obscure, is critical to people declaring bankruptcy, since it gives them the breathing room they need to sort out their finances. But what exactly is the automatic stay, and how can it help people suffering from severe financial distress?
What is the Automatic Stay?
In simple terms, the automatic stay is a type of court order that is issued by the court automatically when someone formally declares bankruptcy. When this happens, all collections proceedings against the bankrupt person immediately stop, including any attempts to repossess property or seize property to repay a debt. It also halts any foreclosure or eviction proceedings that are ongoing, preventing the person from being kicked out of their home. Once it is in place, a person’s property cannot be seized without the permission of the bankruptcy court.
What is the Benefit of the Automatic Stay?
The biggest benefit of the automatic stay is that it prevents people who are declaring bankruptcy from having their property taken from them by creditors. It also helps them to avoid homelessness by stopping any attempts to kick them out of their homes, thus ensuring they will be able to go through bankruptcy while still having a roof over their head. This gives them the chance to handle their difficult financial situations without the fear of losing everything in the process.
How Long Does the Automatic Stay Last?
The automatic stay will remain in place until the end of your bankruptcy proceedings, which generally means completing the bankruptcy process. For most people, this is typically a period between three and five years. Once you have finished with the bankruptcy process, the automatic stay will lift, and you will again be subject to potential collections. However, assuming all goes well, that should not be an issue for most people, as bankruptcy should discharge all or most of their debts.
Can the Automatic Stay Help You?
Ultimately, the question as to whether you should declare bankruptcy is something that you should decide for yourself. If you are suffering from severe financial distress and think bankruptcy and the automatic stay might be able to help you, it may be worth speaking to a bankruptcy lawyer. They can review your financial situation with you, and determine what legal options might be available to you, including what may work best for your situation.
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.