Michigan Automatic Stay Stops Creditor Harassment

Stop Creditor Harassment with Bankruptcy’s Automatic Freeze  

 

Those who are facing a bankruptcy filing are often fearful for what their future holds. Luckily, federal bankruptcy law creates an automatic stay, which is described below. It is easier to understand if you think of the automatic stay as an automatic freeze.

 

Think of driving a car down the highway at a very high speed. All of a sudden, somebody slams on the brakes. The car comes to a screeching halt. That’s what the bankruptcy automatic stay does.

 

In short, this automatic stay allows for those facing bankruptcy to have protection against a foreclosure sale and protection against creditors’ collection efforts, harassing phone calls, lawsuits, wage garnishments, and even utility disconnections. Everything comes to an immediate halt as soon as we file your bankruptcy case. Suddenly, you’re protected by the automatic stay.

 

If you are considering filing for bankruptcy protection, you might still be wondering about your rights concerning home garnishment, foreclosure or car repossession. In this guide, you will find answers to why automatic stay is created, what it can and cannot prevent, and how to use it to your benefit.

 

Why is an automatic stay allowed?

 

The automatic stay / freeze was created to give immediate relief to the debtor. It protects debtors during a time when they might have many creditors pursing them. It allows the debtors some relief from ongoing collection efforts, harassment by creditors and collection agencies, and foreclosure – whether this is a temporary delay or complete prevention.

 

Automatic stay allows the debtor and their bankruptcy attorney to closely examine their financial situation and start to create some sort of plan for the future. Sometimes, it is even the case that debtors are completely and permanently relieved of the financial pressures that caused them to file for bankruptcy in the first place.

 

Which aspects of bankruptcy does automatic stay protect?

 

One of the most important things that automatic stay protects is your home: it can protect you from a foreclosure sale. This can give you time to look for a new place to live, if you’re filing for protection under Chapter 7 of the bankruptcy code.

 

Or, if you’re filing for Chapter 13 Bankruptcy, this can give you time to catch up and/or restructure your mortgage payments. Automatic stay can also prevent utility disconnection for a minimum of 20 days. In short, you get some breathing room.

 

Another huge benefit of automatic stay is protection from wage garnishment. Wage garnishment is when money is automatically pulled from your paycheck or other source of income. Normally a court order enforces wage garnishment. However, with the automatic stay, your money is protected. It is protected whether you are receiving a regular paycheck or Social Security payments from the government (although Social Security is generally exempt from garnishment anyway, except for some limited reasons like child support).

 

What are some of the limitations of automatic stay in Michigan?

 

The automatic stay in Michigan does not offer unlimited protection. For instance, you still have to pay taxes and child support. If you fail to pay your taxes, you may be audited or pursued by the IRS. However, your property and income are still protected, so the IRS will not be able to seize these from you.

 

If you are paying child support or alimony, you will have to continue making these payments while filing for bankruptcy. Additionally, if you have any potential criminal convictions, you will still have to face them because criminal proceedings are separate from your debts.

 

Best Use of Automatic Stay

 

If you are facing mounting debt and financial troubles, bankruptcy will not solve all your problems. However, filing for bankruptcy allows the automatic stay protections to fall into place immediately, which can help you as you try to gather your finances.

 

An automatic stay protects you from collections and continuing wage garnishment, which can buy you some time as you consider how you want to move forward. During this time, you can create plans to protect your assets, property and income as provided under the U.S. Bankruptcy Code. Our attorneys have helped debtors for decades.

 

Contact the dedicated bankruptcy attorneys at The Kronzek Firm today!

Call us at 1-517-886-1000

 

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