What is an Automatic Stay?
Our New Jersey Bankruptcy Attorney Explains One of the Benefits of Bankruptcy
Filing for bankruptcy in New Jersey can do more than just help you discharge your unsecured debt. It can help you stop foreclosure on your home and put an end to stressful creditor calls immediately. As soon as you file for bankruptcy, an automatic stay goes into effect. This prevents any further collection actions against you while you go through the bankruptcy process. The automatic stay is one of the most powerful benefits of bankruptcy; it provides immediate relief if you are struggling with too much debt.
While bankruptcy has negative associations for many people, at Garland & Mason, L.L.C., we believe that the advantages of bankruptcy, such as the automatic stay, often far outweigh the disadvantages. If you are dealing with more debt than you can repay, a New Jersey bankruptcy attorney can explain how filing Chapter 7 bankruptcy or Chapter 13 bankruptcy can help now.
What is an Automatic Stay and What Does It Do?
An automatic stay is a court order issued as soon as you file for bankruptcy. You do not need a hearing or judgment. A notice of automatic stay goes directly to your creditors. This prohibits them from making any further attempts to collect money from you until the bankruptcy process is over. This means that they cannot call you, send you letters or contact you to try to get payment. This includes wage garnishment, property repossessions or new property liens. An automatic stay will also immediately stop foreclosure proceedings on your house – even if the process has already started.
For many people, the automatic stay is one of the most important bankruptcy benefits. It removes the stress caused by harassing creditors and gives you time to formulate a plan.
How Long Does an Automatic Stay Remain in Effect?
An automatic stay will usually last until your bankruptcy case settled and the court discharges your remaining unsecured debts. Depending on whether you file Chapter 7 bankruptcy or Chapter 13 bankruptcy, the stay could last from four to six months, or anywhere from three to five years. During that time, you will be free from creditor harassment and collections while you either liquidate your nonexempt assets or follow a Chapter 13 repayment plan. Then, at the end of the bankruptcy process, the court will discharge your remaining unsecured debt. This means that your creditors cannot collect on any discharged debts.
However, in some cases, an automatic stay can expire or be lifted before your bankruptcy case is complete. If you previously filed for bankruptcy within a year of your current case, the automatic stay will only last for 30 days, unless you can prove to the New Jersey bankruptcy court that you have grounds to declare bankruptcy and intend to complete the process. This provision stops people from filing bankruptcy multiple times in a row in order to take advantage of bankruptcy benefits, like the automatic stay, without actually liquidating assets or following a payment plan.
Your creditors can also file a motion to have the automatic stay order lifted before your bankruptcy is complete. The courts will only lift the order if your creditors have a very good reason for wanting to do so, which is more difficult than it sounds. Unless you are behind on your payments for a secured debt (which you usually cannot discharge in bankruptcy), it is unlikely that your creditors will have grounds to petition to lift the stay.
Get More Info About the Automatic Stay in a Free Review with a New Jersey Bankruptcy Attorney
An automatic stay is one of the benefits of bankruptcy for people with too much debt and creditor harassment. If you are looking for debt relief options, a New Jersey bankruptcy attorney from our law firm will review your case for free. Then, we can explain if filing for bankruptcy and an automatic stay can help you. Contact us online or call our Monmouth County bankruptcy law firm to schedule a free consultation.