Are creditors on your back? Are you receiving collection letters in the mail, or is your cellphone ringing off the hook?
If you’re tempted to block the collectors’ numbers, or if you’re afraid that your automatic deposits will be snatched by creditors, you will be interested in learning about how bankruptcy can stop creditors dead in their tracks.
When a debtor files for bankruptcy, something called the “automatic stay” goes into effect. What the automatic stay does is immediately prohibit most collection actions from being taken against you, including evictions, wage garnishments, and foreclosures.
If you are at risk of being evicted or losing your home to the foreclosure process, you may find that filing for bankruptcy protection is the best thing you can do to protect yourself and your family during this financial crisis.
What can the automatic stay prevent from happening?
If you are facing any of the following emergencies, you would benefit from the automatic stay:
- Your utilities are going to be disconnected.
- Your home is being foreclosed upon.
- You are late on your rent and facing an eviction.
- You face multiple wage garnishments.
- Your public benefits were overpaid and now you face collections.
While an automatic stay prevents most collection activity, it does not stop the IRS from auditing you, although it does stop the IRS from seizing your income. The automatic stay cannot stop criminal proceedings, nor can it stop collections for child or spousal support.
What about wage garnishments?
In Pennsylvania, wage garnishments are permitted for student loans, court-ordered restitution for criminal cases, back rent on residential leases, obligations for divorce distributions, certain taxes, spousal support and child support, but some of these can be stopped by the automatic stay.
If you have questions regarding the automatic stay and how it affects any of the above debts, we urge you to contact the Harrisburg and York bankruptcy attorneys at our firm.