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If you’re just starting on your bankruptcy journey, you may not be familiar with the phrase automatic stay. Our team of Jefferson County bankruptcy attorneys takes pride in not only handling your case with her experienced and care but educating you along the way. To that end, we’ve designed this website to help you better understand some of the basic principles of bankruptcy, including the automatic stay, in and around Denver County.
Stops Creditor Harassment- Creditor harassment is just one of the many stresses that can come with overwhelming amounts of debt. Once a Chapter 7 or Chapter 13 bankruptcy filing is in the works, you can expect most harassing phone calls, letters, and emails to stop.
Stops Utility Disconnections- If you’re behind on a utility bill in Larimer County or the surrounding areas and the company is threatening to disconnect your water, electric, gas, or telephone service, the automatic stay will prevent the disconnection for at least 20 days. Although the amount of a utility bill itself rarely justifies a bankruptcy filing, it might make sense to file if you have other debt that you can discharge.
Halts Wage Garnishment- For a person already struggling with financial problems, wage garnishment can be a devastating turn of events. Wage garnishment is a legal tool often used by debt collection companies to collect credit card debt, medical debt, and other types of unsecured debt. The automatic stay enacted by filing for bankruptcy in Jefferson county or the surrounding area stops most wage garnishment, although there are exceptions to every rule and an experienced Colorado bankruptcy attorney can go over any wage garnishment exemptions with you.
Pauses Foreclosure or Eviction- You don’t have to live in fear of losing your home. One of the greatest benefits of filing for Chapter 13 is being able to stop a foreclosure on a house and catch up on your mortgage after falling behind on payments.
Halts Car Repossession- Much like a foreclosure, the automatic stay will stop a repossession as long as the car or other repossessed property has not yet been sold. That means your car will be returned to you and your auto loan debt will be managed through the bankruptcy process. If you’re worried about losing your car, a bankruptcy filing can help.
Stop Payday Loans- If you’ve fallen behind on monthly bills, a payday loan may seem like a great solution. Also known as cash advances or paycheck advances these are short-term loans offered at very high-interest rates. You may hear your CO bankruptcy attorney refer to them as predatory loans or predatory lenders. These loans are still considered unsecured debts and can be included in a bankruptcy filing, and the automatic stay halts any predatory lender from continued attempts to collect the debt.
Halts Most Pending Judgements or Lawsuits- Some pending lawsuits may stop after filing for bankruptcy, but only if it involves civil matters outside of family or criminal law. If you are ever sued, the protection offered by the automatic stay extends to actions that may have been filed before the bankruptcy started, in addition to any pending lawsuits. A knowledgeable Boulder County area bankruptcy attorney will be able to explain your specific situation and how any judgments against you can be affected.
Criminal Prosecution– The stay doesn’t stop criminal prosecutions. If you’ve committed a crime or are accused of it then an automatic stay can’t prevent you from going to trial and anything that follows.
Retirement Plan Loans– It’s common for people to borrow money from their 401k account to pay bills when they begin to experience difficult financial circumstances. If you took out a loan against an IRA then any payments that are being automatically deducted from your paycheck will still be deducted.
Paternity and Divorce– An automatic stay will not affect any paternity tests or divorce proceedings. Actions to establish or modify support are also not stayed. Neither are proceedings involving custody, marital status, or paternity. The only time a divorce may be held up by an automatic stay is if there is property that needs to be divided.
Tax Administration- As mentioned earlier, the automatic stay will prevent garnishment for tax debts, but the taxing authority still has the right to continue certain actions in an attempt to collect taxes you owe, including tax assessments and auditing.