When creditors start breathing down your neck in an effort to collect your outstanding debts, you may feel understandable anxiety and irritation. Many people in Minnesota face similar circumstances, and if you have been dodging creditor communications because you do not have enough money to pay what you owe, you may be exploring your options and thinking about potentially filing bankruptcy.
According to LendingTree, once you initiate consumer bankruptcy proceedings, the court issues something called an “automatic stay.” The automatic stay is a period in which your creditors have to stop contacting you while you work out the details of your bankruptcy case. During this time, you enjoy temporary relief from some, but not necessarily all, of your creditors. More specifically, bankruptcy’s automatic stay offers you relief from the following.
Wage garnishment occurs when one of your creditors takes some of your wages to cover the balance you owe it. You stand to lose a significant portion of your paycheck to wage garnishment until you cover the balance. Yet, wage garnishments cease during the automatic stay period.
Having your electric, heat or water companies tell you they are going to disconnect your services may have you feeling uneasy. However, they may not do so while the automatic stay period is ongoing.
Foreclosures and evictions
Bankruptcy’s automatic stay may also give you some relief if your landlord is threatening to evict you, or if you are facing the threat of foreclosure.
If you have to make spousal maintenance or child support payments each month, know that bankruptcy’s automatic stay has no impact on these obligations.